FG allays fear over China debt

says property takeover not part of loan agreements

THE Federal government has allayed the fear of many Nigerians who have reservation about the financial assistance being given to the country by China Exim bank due to property take over by the Chinese.

China has taken over infrastructures in many African countries that could not repay its debt. Sri Lanka, Zimbabwe, Kenya among other countries are facing the pressure of forfeiting their infrastructures to China over unpaid debt.

The Minister of Transportation, Rotimi Amaechi said on Monday in Nairobi, Kenya at the 6th Annual East African Transport Infrastructure conference that, the agreements Nigeria entered into with the China Exim bank does not include property takeover in case of Nigeria’s inability to repay.

According to him, ‘I don’t know the arrangement these countries made with Exim bank, I do not think we will have any problems with repaying our loans.

“The countries that they are talking about are Kenya, Somalia and Sudan. These are countries that have not been able to repay their loans I think. So what they (China) are doing is that they are taking over to manage and get their money but it’s not so in Nigeria.”

He said “In fact, it’s affecting our ability to borrow and they are now saying look, we can’t lend to you because these people are not ready to pay back. How do we know you are going to pay back!.”

“We are talking with them to have a meeting with them to say that by June, we should be able to say this is our repayment plan. It also depends on what agreement plan you have with them, our agreement does not include the fact that they will come and take over our seaports or railways or airports.

“We believe that we can pay back using our own money. That shouldn’t be any problem, our focus should be to run this infrastructure efficiently so we can pay back and there is no plan for them to manage any of it,” he stated.

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Amaechi lamented that “If you don’t go to China, who will give you money! America is going to China even Russia, what is wrong if Nigeria goes to China, I think we should not be afraid of China.”

The Minister explained that “nobody runs railway with passengers fare. You can never get one naira out of it. Nigerians think railway is just to carry passengers but the problem is that the goods that should be on the rail are the ones on the road and it’s destroying the road. Once we conclude the rail projects and those goods are transferred to the rail, that is when we will start making money to pay our debts.

“Currently our trains are carrying a passenger. people are celebrating Lagos-Ibadan because they are looking at it that oh, I’ll just jump into the train and one hour, I’m already in Ibadan.

“That’s not the overall aim. The reason why the federal government say we must get to the seaports is to decongest the Apapa seaports. That’s where the money lies,” he noted.

Amaechi said the government is entering a partnership with another Chinese company. “They came to see me two days ago. the company is to raise 10% of the equity, the federal government will rise 15%of the equity. The remaining 75% is to be borrowed not by the federal government but by the company because we formed a Special Purpose Vehicle (SPV) in which we use in running the contract.

The SPV is a company that will run that contract. this company will run the contract, complete it and run the business. They will borrow money to run the business and pay back the loan.”

He said that “the federal government will give them a sovereign guarantee. They, in turn, will give us a performance guarantee. The performance guarantee is indicative of what we are not able to pay back and they call for the federal government guarantee, we call for their own performance guarantee. So back to back, the federal government is protected” the Minister stated.

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