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Business News of Wednesday, 29 March 2023


China rejects Nigeria's $22bn loan request, FG to go back as Reps approve counter request

President Buhari and XI Jinping President Buhari and XI Jinping

The House of Representatives has approved a counter request for a loan of $973,474,971.38 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.

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.

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

The motion was titled 'Rescission of the 2016-2018 Federal Government External Borrowing (Rolling) Plan.'

Fulata highlighted that the plan had 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 for the 2016-2018 Medium Term External Borrowing (Rolling) plan.

He further highlighted 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 resulted in China Exim Bank withdrawing its support for the project.

He added, “The House is 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 as the new financier in the sum of $973,474,971.38 only.”

Fulata, therefore, prayed the House to “rescind its decision on the financier and harmonized 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 harmonized 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.