Nigeria’s overall debt to China as of June 30, 2015, was $1.38 Billion.
NewsReport Nigeria June 15, 2021
According to statistics received from the Debt Management Office on Monday, the Buhari government borrowed $2.02 billion in loans from China since 2015.
According to DMO figures, Nigeria’s total debt to China as of June 30, 2015, was $1.38 billion.
NewsReport gathered that as of March 31, the country’s Chinese debt portfolio had increased to $3.40 billion.
According to the DMO, Chinese loans are concessional loans with annual interest rates of 2.50 percent, tenors of 20 years, and grace periods (moratoriums) of seven years.
The debt office stated that the loan terms were in accordance with Section 41 (1a) of the Fiscal Responsibility Act of 2007.
China’s loans are project-specific. The Nigerian Railway Modernisation Project (Idu-Kaduna section), the Abuja Light Rail Project, the Nigerian Four Airport Terminals Expansion Project (Abuja, Kano, Lagos, and Port Harcourt), the Nigerian Railway Modernisation Project (Lagos-Ibadan section), and the Rehabilitation and Upgrading of Abuja-Keffi-Makurdi Road Project are among the eleven projects.
According to the DMO, the low-interest rates on the loans reduced the government’s interest cost, while the long tenor allowed the principal sum of the loans to be repaid over many years.
However, as of March 31, a total of $719.61m has been paid to China as debt service since the third quarter of 2015.
46.15 percent ($332.03 million) of the debt service was paid to cover the interest on the loans.
$102.19 million was utilized to repay the debt owed to China in the first quarter of 2021. This is around 11% of the entire $1.0 billion spent to service external loans over the period.
The DMO recently disclosed that Nigeria had more than $5.83bn foreign loans that had been approved but not yet disbursed as of December 31, 2020.
Out of this amount, $1.25bn is supposed to come from the Export-Import Bank of China. Apart from multilateral agencies, China has remained the nation’s largest creditor.
There had been fears among Nigerians that the country may forfeit some of the projects in case of loan defaults.
The fear grew when the Minister of Transportation, Rotimi Amaechi, in August 2020, confirmed that the country waived its sovereign immunity to obtain Chinese loans.
The minister, however, added that as long as debts were repaid, there would be no need for China to claim any infrastructure.
“We must learn to pay our debts and we are paying, and once you are paying, nobody will come and take any of your assets,” he had said.
Despite the assurance, fear persists that the Chinese loans contain some obnoxious clauses that could breach the nation’s sovereignty especially as the loan agreements are not available in the public domain.
Amaechi denied knowledge of any clause that hands over a national asset to China in case of any default in an AriseTV interview on Monday.
He disclosed that the administration of Major General Muhammed Buhari had paid $150m out of the $500m borrowed by the administration of President Goodluck Jonathan for the Abuja-Kaduna Rail project.
The minister also commented on other issues such as the suspension of Bala-Usman and the impacts of the country’s Deep Blue Project on every Nigerian.
When asked about the plans of the Federal Government to pay back the loans so as to avoid the Zambian experience where some national assets such as the Kenneth Kaunda International Airport, the Zambia National Broadcasting Corporation, and the National Power and Utility Company were reportedly used to settle Zambia’s financial obligations to China, Amaechi said borrowers should meet their obligations.
He said, “When you take loans, you are expected to pay back. Today we are paying back. Under the regime of President Goodluck Jonathan, the loan for Abuja-Kaduna was taken. It was about $500m. Today, we have paid about $150m on that loan.
“Nigeria has never defaulted when it comes to repayment. I do not also expect that we should default on any other loan that we have taken.”
While commenting on the status of the suspension of Ms. Hadiza Bala-Usman from the Nigerian Ports Authority, he said, “I am not aware that I suspended Hadiza. I am not the president, and I do not have such powers. That power rests with the president.
“I am not aware that Hadiza was actually suspended. I suspect she was asked to step aside, to enable an investigation to be carried out on NPA, not on her. We are investigating NPA.
“At the conclusion of the investigation, all the reports will be sent to the president who will then make a decision on the way forward.”
The minister also said that he was not aware of when the panel would finish and that it was in the hands of the panel.
Responding to how the $195m Deep Blue Project will affect all Nigerians who are not seafarers, he said, “What we have done with the Deep Blue Project is that we will reduce the cost of producing oil in Nigeria.
“By the time we provide security on the waters, the economy would improve because there would be more money coming into the economy. That is the impact it will have.”
He added that the company that handled the project guaranteed to refund of the money spent on the project if there was no improvement in the economy six months after the project.