China Rejects Nigeria's $22bn Loan Request, FG to Go back as Reps Approve Counter-Request

China Rejects Nigeria's $22bn Loan Request, FG to Go back as Reps Approve Counter-Request

  • The Chinese Development Bank has rejected the Federal Government's request for a $22 billion loan
  • This prompted the House of Representatives to approve a counter-request for another loan
  • Meanwhile, DMO data shows that the total debt Nigeria owes to China through the Exim Bank of China stands at $4.1 billion

The House of Representatives has approved a counter request for a loan of $973,474,971.38 ($973 million) after the Federal Government's request for a $22.7 billion loan from China Development Bank was rejected.

The rejected loan was intended to fund the Nigerian Railway Modernisation Project's Kaduna-Kano segment.

China Nigeria loan
China is one of Nigeria's biggest creditors. Photo credit: @presidency
Source: Facebook

However, due to concerns about Nigeria's ability to repay the loan and the impact of the COVID-19 pandemic on the project, China Exim Bank withdrew its support.

The new loan request

Abubakar Fulata, the Chairman of the House Committee on Rules and Business, proposed a motion to amend the legislative chamber's previous resolution, which had approved an unsuccessful loan deal.

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The motion, titled 'Rescission of the 2016-2018 Federal Government External Borrowing (Rolling) Plan,' was based on the fact that the plan had already been approved by the Senate and the House of Representatives on March 5, 2020, and June 2, 2020, respectively.

Fulata reminded the House that the National Assembly had approved $22,798,446,773 ($22.7 billion) for the 2016-2018 Medium Term External Borrowing (Rolling) plan.

He also noted that the Federal Ministry of Finance had requested modifications to the financing proposal for the Nigerian Railway Modernisation Project due to the COVID-19 pandemic, which led to China Exim Bank withdrawing its support for the project.

Additionally, he mentioned that the contractor, CCECC Nigeria Limited, had collaborated with the Federal Ministry of Transportation to engage China Development Bank as the new financier for the project, with a loan amount of $973,474,971.38 ($973 million).

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Fulata, therefore, prayed the House to rescind its decision on the financier and harmonised terms and approve the change of financier from China Exim Bank to China Development Bank.

Punch reports that the lawmakers unanimously granted the prayer, and the House of Representatives approved the conditions outlined in the harmonised term sheet, which included details such as the segment covered by the loan, the financier, the loan type, maturity period, currency, interest rate, commitment fee, and upfront fee.

From Obasanjo to Buhari: List of loans borrowed under Nigeria's 4 presidents had earlier reported that President Muhammadu Buhari stirred heated reactions from Nigerians when he tabled a fresh request for the approval of another set of loans before the Senate.

The Nigerian leader sought approval from the National Assembly to borrow $4,054,476,863.00, €710 million, and a grant of $125 million.

Many Nigerians are against the borrowing spree of the current administration as it seeks to provide more infrastructure amid dwindling revenue.


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