FG seeks alternative as China-Exim bank declines ₦22.8 billion loan request

The Federal Government has turned to the China Development Bank (CDB) seeking a loan of $973.4 billion after the China-Exim Bank rejected its loan application of $22.8 billion.

House of Representatives revealed this after giving the nod to the president's request to approach the China Development bank for the loan.

The motion for the legislative chamber to amend its resolution titled: Rescission of the 2016–2018 Federal Government External Borrowing (Rolling) Plan was moved by the Chairman of the House Committee on Rules and Business, Abubakar Fulata granting approval to the failed commercial deal.

Fulata revealed the earlier agreement with China-Exim bank failed due to the withdrawal of the bank following the outbreak of the COVID-19 pandemic.

Fulata said “the National Assembly approved the sum of $22,798,446,773 under the 2016–2018 Medium Term External Borrowing (Rolling) plan. Aware of the Communications from the Federal Ministry of Finance requesting approval of modifications to the financing proposal for the Nigerian Railway Modernisation Project (Kaduna–Kano segment) occasioned by the COVID–19 Pandemic whereof China-Exim Bank withdrew its support to finance the project.

“Also aware that to secure funds for the project, the Contractor (CCECC Nigeria Limited) in collaboration with the Federal Ministry of Transportation engaged China Development Bank (CDB) as the new financier in the sum of $973,474,971.38 only.”

The motion, however, was opposed by Hon. Ossai Nicholas Ossai (PDP, Delta) who requested that lawmakers should have copies of the new agreement before the loan would be approved.

The motion was passed after the speaker, Hon. Femi Gbajabiamila put the motion to a voice vote.

The new conditions for the harmonised term sheet were stated as followers:

Segment – Kaduna–Zaria–Kano; financier – China Development Bank; type of loan – commercial loan; maturity – 15 years; currency – euro; interest rate – 2.7% + 6 months Euribor; commitment fee – 0.4%; and upfront fee – 0.5%.