Nigeria is indebted to the Peoples Republic of China by $678.91m and not $6.26bn as earlier reported.

Information obtained by our correspondent from the Debt Management Office revealed that Nigeria’s indebtedness to China represented 99.95 per cent of the country’s total debts to bilateral and commercial creditors as at September 30, 2012.

According to the DMO, the total debt to bilateral and commercial creditors during the period under review stood at $679.22, of which $678.91m is from China.

However, China’s credit facilities to Nigeria may rise due to fresh loan agreements signed by the two countries.

According to DMO, loans under negotiations from China or any other country do not constitute debt.

It said, “It is important to clarify that even if Nigeria is negotiating a new loan from China (or indeed from any other country), the loan under negotiation does not constitute a debt.

“Even when the loan is eventually contracted through the signing of loan agreement after due approval by the National Assembly, it will still not be part of the debt stock. Only the amount of the contracted loan disbursed to and received by the country, is qualified to be counted as part of the debt stock.”

However, after September 30, 2012, the Federal Government signed fresh financing agreements with Chinese institutions, though details of the expected drawdown of most of the loans are not yet known.

For instance, the Minister of Finance, Dr. Ngozi Okonjo-Iweala, had on September 11, 2012 in Beijing, signed three loan agreements with the China Exim Bank. The agreements are for $500m for the Abuja Light Rail Project; $500m for the construction of four airport terminals in the country; and $100m for the Galaxy Backbone expansion of connectivity among government ministries, departments and agencies.

Also, on November 6, 2012, the government signed a Memorandum of Understanding with Sinohydro Corporation and China National Electric Engineering Corporation for the construction of the Mambila and Zungeru hydro power plants.

It was disclosed then that the Mambila plant would cost $3.2bn, with the contractors raising 85 per cent of the cost; while Zungeru would cost $1.3bn with the Federal Government contributing 25 per cent of the sum as counterpart funding.

The loan agreement signing was witnessed by ministers of Aviation, Federal Capital Territory and Works (State), Ms. Stella Oduah, Senator Bala Mohammed, and Ambassador Bashir Yuguda, respectively, who were part of the team that worked out the final details of the agreement.

Also present were the Director-General, DMO, Dr. Abraham Nwankwo, and Special Adviser to the President on Performance Monitoring, Prof. Sylvester Monye.

Explaining the rationale for prioritising the projects for which the loans would be utilised, Okonjo-Iweala said they were targeted at making a difference in the lives of Nigerians across socio-economic segments.

She said, “President Goodluck Jonathan is keeping his promise to Nigerians through these important projects. The light rail in Abuja will improve transportation for all residents, especially the working class.

“The Galaxy Backbone project will help to improve service delivery in areas like education and health, while empowering the youth with better connectivity to the rest of the world.

“And the five new airport terminals will, like the others, create jobs and also ensure that Nigerian air passengers enjoy the services and convenience that their counterparts in other parts of the world take for granted.”

On the Abuja light rail project, Mohammed had said, “We are here for formality. We are here to start drawing from the facilities so that the Chinese company that is handling it, CCECC, will get the finance.”

The project had earlier been suspended for lack of finance, but with the new financing window, the construction resumed.

On the new airport terminals, Oduah, had while announcing the loan in September 2012, indicated that mobilisation to site would begin within 90 days.

The loan, which was to be utilised by a Chinese firm for the construction of the airport terminals, has 22-year tenure, a moratorium of five years and an interest rate of two per cent per annum.

Oduah had said, “Following the approval of Federal Executive Council, we have concluded arrangements to commence the construction of not just one, but five brand new and world class international airports.

“The contracts for the construction of the five airports have a lifespan of 24 months. The projects are to be executed with a concessionary loan of 22 years with five years moratorium at an interest rate of two per cent.

“Mobilisation to site by the contractors is expected to commence within 90 days. What this means is that before the end of the lifespan of this administration, we would have been able to bequeath to Nigerians the airports of their dreams. This is a giant, bold step by the present administration to provide Nigerians and the travelling public with airports that truly tell the story of whom we are as a nation.”

On the modernisation of the Lagos-Kano rail line, the Federal Executive Council had on July 18, 2012 approved the $1bn loan from Exim Bank of China.

Announcing this at the signing of the Memorandum of Understanding for the award of contract, the Minister of Transport, Senator Idris Umar, said negotiations for $500m had been concluded, while negotiations for the second tranche of $500m would be concluded in due course.

On December 20, the Federal Government announced that the Abuja-Kano rail line had been restored under the contract. Maku praised the Federal Government for this achievement during his press briefing on the achievements of government on December 31, 2012.