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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.
READ ALSO: Why World Bank blacklisted CCECC, 5 other Chinese firms
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.
He said: “The House recalls that the National Assembly approved the sum of $22,798,446,773 only under the 2016–2018 Medium Term External Borrowing (Rolling) plan.
“The House is aware of the communications from the Federal Ministry of Finance requesting approval of modifications to the financing proposal for the Nigerian Railway Modernisation Project (Kaduna–Kano segment) occasioned by the COVID–19 pandemic, whereof China Exim Bank withdrew its support to finance 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.”
READ ALSO: Nigeria sinks deeper into debt, negotiates another loan from China
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.”
The lawmakers unanimously granted the prayer.
The House of Representatives also gave its approval for the conditions outlined in the harmonised term sheet, which includes the following details: the segment covered by the loan is Kaduna-Zaria-Kano; the financier is China Development Bank; the loan is a commercial loan; the maturity period is 15 years; the currency is the euro; the interest rate is 2.7% plus 6 months Euribor; the commitment fee is 0.4%; and the upfront fee is 0.5%.
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