$328.87m Railway consultancy contracts: China shuns new loans request by Nigeria

…As FG secures Standard Chartered Bank loan

…Approves N115.43bn  BUA Tax Credit Scheme  for Katsina Highway construction

Abimbola Abatta, Seth Akande and Uthman Salami

The People’s Republic of China has shunned Nigeria for fresh loans. This rejection  particularly affected  the request for $328.87million loan to finance  railway consultancy services contracts secured alternatively by the Federal Government  from Standard Chartered Bank and other sources by the Federal Government.

Other approvals secured at the FEC include the N115.43billion  BUA Tax Credit Scheme  for dualisation of the proposed Kano-Kazaure-Kongolam Katsina Highway, the concessioning of the Onitsha River Port and Energy Transition Plan for the country.

The approvals were made known to journalists after the virtual FEC meeting presided over by President Muhammadu Buhari at the Presidential Villa in Abuja.

The  Minister of Transportation Rt. Hon. Rotimi Amaechi  lamented while briefing  journalists after the  meeting of the Federal Executive Council (FEC),  on Wednesday that the frustration by  China delayed take off of the new railway consultancy contracts.

According to the Debt Management Office (DMO), as at March 31, 2020, the Total Borrowing by Nigeria from China was USD3.121 billion (N1,126.68 billion at USD/N361). This amount represents only 3.94% of Nigeria’s Total Public Debt of USD79.303 billion (N28,628.49 billion at USD/N361) as at March 31, 2020. Similarly, in terms of external sources of funds, Loans from China accounted for 11.28% of the External Debt Stock of USD27.67 billion at the same date.

On why the Federal Government is abandoning the agreements signed with China on construction of railway in the country, Amechi explained “actually, that is why there is a delay. We were waiting on the Chinese to give us the loans we applied for and till today they’ve not replied. They kept delaying us – will the delay extend our tenure? The answer is no.

“We’ve gone to Standard Chartered Bank and while they’ve done financial closure, they’ve approved some level of funding. We are also pursuing Port Harcourt-Maiduguri line with Standard Chartered Bank.

“The Lagos-Kano, part of it will come from Standard Chartered Bank, and part of it will come from some commercial banks in China,” he said.

Speaking about approvals at FEC, Amaechi disclosed that the ministry presented two memoranda, which include the consultancy services and the concessioning of the Onitsha River Port.

He said, “Ministry of Transportation presented two memos and the first one has to do with the contract for consultancy services for the supervision of the various railway projects. Remember that we have about three railway projects that are yet to start construction and they include the Port Harcourt-Maiduguri, Kano-Maradi and then the Abuja-Warri.

“For the consultancy services, the following contractors were approved, with the total cost of $183.7million. The contractors GIX Engineers Infrastructure Excellence/Yaroso & Partnership Ltd, Core Consulting Engineering Plc. That’s for Abuja to Warri.

“For the consultancy services for supervision of Port Harcourt-Maiduguri Railway, with branch lines to Bonny Deep Seaport and Port Harcourt Industrial Park and then to Owerri. We have Kyari Consults SDMBHD/Jamood Global Services Limited at $97.5million. The first one is $38.4million.

“The last one is consultancy services for the supervision of Kano-Katsina-Jibia-Maradi Rail-line to TEAM (Technics Engineering Architecture Marketing Nigeria Limited) and that is for $47,670,000million. All of them are for a period of 36 months. That’s the first.

“The second one is that the cabinet approved a concessionairing agreement for the Ministry of Transportation to concession the Onitsha River Port to a company called Inversal Elysium Consortium. They are to manage the river port for 30 years.”

Meanwhile, N115.4billion was also approved for the dualisation of the proposed Kano-Kazaure-Kongolam highway in Katsina State from single carriageway to a dual carriageway.

The Minister of Works and Housing, Mr. Babatunde Fashola (SAN), said the project covers 131.4 kilometers, adding that it is expected to be completed within 48 months.

Fashola noted that the financing for the project would be done by the Tax Credit Scheme of Bua International Limited.

In his words, “Ministry of Works and Housing presented one memo for the dualisation of the Kano-Kazaure-Kongoland highway. 131.4 kilometers from a single carriage way to dual carriage way. So, Council approved that proposal at a cost of N115,425, 896,907.15 kobo (in billion) over 48months.

“The instructive thing is that the financing will be done by the Tax Credit Scheme of Bua International Limited. And they will use Messrs PW Construction Nigeria limited, a company in which they have acquired some interest to undertake the construction.”

In a related development, the Minister of State for Environment, Sharon Ikeazor, said Council, during the session, approved an Energy Transition Plan for the country.

The federal government commitment to Net Zero was first made public by President Muhammadu Buhari last year November in Glasgow.

The minister said  the approval of the energy transition plan by the federal executive council was critical if the government is serious about driving maximum benefits from the Net Zero ambition across all sectors of the economy.

“This memo was presented as a plan for Nigeria to achieve net zero carbon emission,” the Minister said, noting, “this will clearly set out the pathway for Nigeria in achieving this.”

Ikeazor further said FEC also approved a second memo to aid the Waste Battery Management Policy for Nigeria.

This policy, according to her, “will create a lot of jobs in the circular economy for Nigeria and at the same time protect the health of Nigerians to make sure that hazardous waste like waste batteries are properly disposed of with regulations, including recycling in Nigeria as well.

She said her ministry also presented to Council, a report on the last COP 26 (the 2021 United Nations Climate Change Conference) which Nigeria attended, and the country’s plans for COP 27 going forward.