Nigeria’s House of Representatives yesterday adopted a motion to look into the country’s loan agreements with China since 2000, to ascertain how viable they are and the possibility of regularising, re-negotiating or cancelling them.
Ben Igbakpa, a lawmaker from Delta State, moved the motion on ‘Urgent Need to Review and Renegotiate Existing China/Nigeria Loan Agreements’ during Tuesday’s plenary.
The House, which adopted the motion, mandated its committees on Debt Management, Treaties, Protocols and Agreements, as well as Finance to liaise with the Ministry of Finance and Debt Management Office to iron out a review of the latest loans from the Asian country on the principle of force majeure.
Igbakpa had said while moving the motion that the House was not unaware that records from DMO showed that China emerged Nigeria’s major creditor under bilateral deals, with $2.3bn, out of $3.3bn. The House also discovered that records with the debt office revealed that Nigeria was indebted to the EXIM Bank of China, which is its biggest bilateral creditor in almost two decades, to the tune of N2tn.
Quoting The Guardian Sunday Magazine publication of November 3, 2019, Igbakpa said representatives were aware that the country obtained 17 Chinese loans to fund projects across different sectors since 2002.
“Information and Communications Technology and Transport sectors have six projects each financed by loans from the Chinese bank, while energy, agriculture and water sectors have three and two projects tied to Chinese loans.
“Note further that according to the Daily Post of September 5, 2018, the first Chinese loan to Nigeria was agreed on March 27, 2002 as follows: $114.89m each for constructing 335 megawatts gas power plants, namely Omotosho and Papalanto (Olorunshogo) in Ondo and Ogun states respectively. Both plants were completed in 2007. The loan was obtained at six per cent interest rate. The loan covered 65 per cent of the cost of the projects, while Nigeria then covered the 35 per cent balance,” he said.
Nigeria has since then gone on to secure 15 more loan deals with the Chinese government on different occasions and at lower rates of interest charges ranging from 2.5 per cent and 3.5 per cent.
The House, which claimed to be in the dark on how most of the China loans were collected and disbursed by the Federal Government, said there was urgent need to subject all existing Chinese loan agreements to forensic fiscal scrutiny and review. It cited global concerns about the fraudulent characteristics of the Asian giant loan contracts with African states.