Nigeria secures $1.5bn Chinese loan to commence Lagos-Ibadan rail project

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Nigerian Government has secured $1.5 billion (about N450 billion) counterpart funding from China for the Lagos-Ibadan rail project set to commence in March.

The Minister for Transportation, Rotimi Amaechi, made the disclosure on Wednesday when he appeared before the Gbenga Ashafa-led Senate committee on land transport to give report of his ministry’s 2016 budget and defend the proposal for 2017.

“In the first quarter of 2017, the foundation of the Lagos-Ibadan segment two of the Lagos-Kano rail project will be laid,” said Mr. Amaechi; adding that, “the implication here is that we will start the Lagos-Ibadan rail line before the end of March.

“Our target is to commence from the Apapa seaport down to Ogun and then to Ibadan.”

Lagos-Ibadan rail line is a segment of the Lagos-Kano railway project, one of the most important and ambitious infrastructural targets of the Muhammadu Buhari-led All Progressives Congress government.

In January, the government announced wholesale release of N72 billion as Nigeria’s counterpart funding for the Lagos-Ibadan railway.

Mr. Amaechi  explained to the senators that the $1.5 billion counterpart funding had been approved by China and was being processed by the China Exim Bank.

“The counterpart funding is ready, but don’t forget that we are borrowing the money from China. The China Exim Bank is processing it.

Minister of Transport, Rotimi Amaechi
Minister of Transport, Rotimi Amaechi

“Our 15 per cent is ready; so, we are waiting for China Exim Bank. They have managed to release and approve $1.5 billion for the Lagos-Ibadan line.

“It is also envisaged that segment three of the Lagos-Kano rail project, which is the Kano-Kaduna stretch, as well as the first phase of the coastal railway line Lagos-Calabar, commencing from Calabar to Port Harcourt with extension to the Onne Deep Seaport will commence after the conclusion of the negotiation of a financing loan agreement,” said Mr. Amaechi.

He then urged the National Assembly to approve the $30 billion national (rolling) borrowing plan of the government. He said the approval was essential for securing funds needed to finance rail projects in the country.

Gbenga Ashafa
Senator Gbenga Ashafa

“The National Assembly needs to give us approval for the borrowing plan so that we can commence work. We can’t sign the loan agreement with China unless there is an approval from the National Assembly.

“What the National Assembly has approved is the counterpart funding, but we need the approval to borrow the remaining money. If you look at $6.1 billion in naira, and we are paying 15 per cent, you will know that the remaining amount is coming from China and until we have approval, we cannot do anything.

“Even now, the China Exim Bank has approved $1.5 billion for the Lagos-Ibadan line. We are not able to sign the loan agreement because we need the approval of the National Assembly.”

On the performance of the 2016 budget, the minister said uncompleted projects in the previous year had been included in the proposed 2017 budget.

Speaking for the Senate, Mr. Ashafa promised cooperation with the transportation ministry to ensure implementation of the infrastructural objectives.

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Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

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