China Exim Bank backed off from financing one of Nigeria’s largest railway modernization projects.
Key highlights:
- China Development Bank (CDB) announced as the new financier for the Kaduna-Kano railway modernization project.
- China Exim Bank backed off from financing one of Nigeria’s largest railway modernization projects.
- Chinese Construction Engineering Company (CCEC) Nigeria Ltd and the Federal Ministry of Transportation concluded the search for a new financier after China Exim Bank pulled out.
The Nigerian Senate revealed that the China Development Bank (CDB) is the new financier for the Kaduna-Kano railway modernization project.
This was disclosed on Tuesday in a motion sponsored by Sen. Sadiq Umar (APC-Kwara).
The Senator revealed that the National Assembly approved a $22.8 billion loan for the modernization of the Kaduna-Kano railway project in 2020.
Financier
The Senate stated that due to the former financier, the China Exim Bank backing off the project, the China Development Bank (CDB) took over, after it harmonized the 2016-2018 Federal Government’s external borrowing plan for the project.
They added that National Assembly approved the loan under the 2016-2018 Medium Term External Borrowing (Rolling) plan, citing that the Federal Ministry of Finance requested approval of modifications to the financing proposal for the Nigerian Railway Modernisation Project (Kaduna-Kano segment).
- “This was occasioned by the COVID-19 pandemic whereof China Exim Bank withdrew its support to finance the project.’’
- “To secure funds for the project, the contractor, the Chinese Construction Engineering Company (CCEC) Nigeria Ltd., and the Federal Ministry of Transportation, engaged the CDB as the new financier for 973.5 million dollars.’’
Senate President, Ahmad Lawan also revealed this issue started in 2018 and was approved in 2020, he added:
- “We are not talking about the approval of the loan; it is the financier that backed out and there is now another financier.”
Finance Gap
Sen. Jibrin Isa (APC-Kogi) revealed that there was a wide gap between the initial $22.7 billion and the $973.5million, wondering if any disbursement was made out of the initial $22.7 billion, he added:
“We need to be very careful about the core structures of these loans.’’
Chairman, of the Senate Committee on Local and Foreign Debts, Sen. Clifford Ordia (PDP-Edo Central), clarifying details of the loan, said:
- “The submission of 22.7 billion dollars was in respect of five projects under the 2016-2018 external borrowing plan.
- “Incidentally some of the other projects were approved apart from the project that has to do with the Kaduna-Kano segment.
- “The financier declined to finance the project, so the CCEC Nigeria Ltd., in collaboration with the Federal Ministry of Transportation had to look for a contractor to finance the segment of the rolling plan.’’
Backstory
The Federal Government stated last year that it is focused on ensuring the completion of the Kano-Kaduna standard gauge rail project.
Minister of Transportation, Mr. Mu’azu Sambo, disclosed this during an inspection of the rail project in Yako, Madobi Local Government Area in Kano.
Sambo said the project was a priority that would add value to the entire country. Meanwhile, contractors revealed that the delay in the project is due to work adjustment from one single track to a double track, citing that FG is trying its best to make the project a success, adding:
- ”We are trying our best to make the project a success.
- “Agricultural produce is produced in the North and transported to the South while goods that are imported into the country come from the seaport.”
Sambo stated that the two major challenges faced by the project were the safety of the workers and the encroachment of land.
Source: Nairametrics
