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In Six Years, Buhari’s Govt Has Borrowed $2.02bn from China

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The Buhari’s administration has borrowed $2.02bn as loans from China from 2015, data obtained from the Debt Management Office on Monday showed, reports The Punch.

According to the statistics obtained from the DMO, Nigeria’s total debt from China as of June 30, 2015 stood at $1.38bn.

However, as of March 31, the country’s debt portfolio from China had risen to $3.40bn.

According to the DMO, loans from China are concessional loans with interest rates of 2.50 per cent per annum, a tenor of 20 years and grace period (moratorium) of seven years.

The debt office said that the terms of the loans were compliant with the provisions of Section 41 (1a) of the Fiscal Responsibility Act, 2007.

The loans from China are tied to project. The projects, (eleven in number as at March 31, 2020), include the Nigerian Railway Modernisation Project (Idu-Kaduna section), the Abuja Light Rail Project, Nigerian Four Airport Terminals Expansion Project (Abuja, Kano, Lagos and Port Harcourt), Nigerian Railway Modernisation Project (Lagos-Ibadan section) and the Rehabilitation and Upgrading of Abuja-Keffi-Makurdi Road Project.

The DMO said the low interest rates on the loans reduced the interest cost to government while the long tenor enabled the repayment of the principal sum of the loans over many years.

However, as of March 31, a total of $719.61m had been made as debt service payment to China since the third quarter of 2015.

Of the amount paid as debt service, 46.15 per cent ($332.03m) was paid to service the interest on the loans.

In the first quarter of 2021, $102.19m was used to service debt to China. This is about 11 per cent of the total $1.0bn used to service external debts within the period.

The DMO recently disclosed that Nigeria had more than $5.83bn foreign loans that had been approved but not yet disbursed as of December 31, 2020.

Out of this amount, $1.25bn is supposed to come from the Export-Import Bank of China. Apart from multilateral agencies, China has remained the nation’s largest creditor.

There had been fears among Nigerians that the country may forfeit some of the projects in case of loan defaults.

“We must learn to pay our debts and we are paying, and once you are paying, nobody will come and take any of your assets,” he had said.

Despite the assurance, fear persists that the Chinese loans contain some obnoxious clauses that could breach the nation’s sovereignty especially as the loan agreements are not available in the public domain.

Amaechi denied knowledge of any clause that hands over a national asset to China in case of any default in an AriseTV interview on Monday.

He disclosed that the administration of Major General Muhammed Buhari had paid $150m out of the $500m borrowed by the administration of President Goodluck Jonathan for the Abuja-Kaduna Rail project.

The minister also commented on other issues such as the suspension of Bala-Usman and the impacts of the country’s Deep Blue Project on every Nigerian.

When asked about the plans of the Federal Government to pay back the loans so as to avoid the Zambian experience where some national assets such as the Kenneth Kaunda International Airport, the Zambia National Broadcasting Corporation and the National Power and Utility Company were reportedly used to settle Zambia’s financial obligations to China, Amaechi said borrowers should meet their obligations.

He said, “When you take loans, you are expected to pay back. Today we are paying back. Under the regime of President Goodluck Jonathan, the loan for Abuja-Kaduna was taken. It was about $500m. Today, we have paid about $150m on that loan.

“Nigeria has never defaulted when it comes to repayment. I do not also expect that we should default on any other loan that we have taken.”

While commenting on the status of the suspension of Ms Hadiza Bala-Usman from the Nigerian Ports Authority, he said, “I am not aware that I suspended Hadiza. I am not the president, and I do not have such powers. That power rests with the president.

“I am not aware that Hadiza was actually suspended. I suspect she was asked to step aside, to enable investigation to be carried out on NPA, not on her. We are investigating NPA.

“At the conclusion of the investigation, all the reports will be sent to the president who will then make a decision on the way forward.”

The minister also said that he was not aware of when the panel would finish and that it was in the hands of the panel.

Responding to how the $195m Deep Blue Project will affect all Nigerians who are not seafarers, he said, “What we have done with the Deep Blue Project is that we will reduce the cost of producing oil in Nigeria.

“By the time we provide security on the waters, the economy would improve because there would be more money coming into the economy. That is the impact it will have.”

He added that the company that handled the project guaranteed to refund of the money spent on the project if there was no improvement in the economy six months after the project.

The Punch

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Economy

Fuel Scarcity: FG Raises 14-Man Panel for Solution

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The Federal Government is meeting with operators in the midstream and downstream oil sector as part of measures towards developing strategic stock for Premium Motor Spirit, popularly called petrol, in key locations across the country.

It said the national strategic stocks would help in addressing the recurring fuel scarcity in Nigeria, as it also announced the constitution of a 14-man committee to find a lasting solution to the disruptions in the supply and distribution of petroleum products.

The Federal Ministry of Petroleum Resources stated that President Muhammadu Buhari, had approved the  constitution of a 14-man Steering Committee on Petroleum Products Supply and Distribution Management, which he would personally chair.

The ministry said the move was to find lasting solution to the disruptions in the supply and distribution of petroleum products across the country.

It said the committee had the Minister of State for Petroleum Resource, Chief Timipre Sylva, as Alternate Chairman, as the team would ensure transparent and efficient supply and distribution of petroleum products.

“Other terms of reference are to ensure national strategic stock management, visibility on the NNPC Limited refineries rehabilitation programme and ensure end-to-end tracking of petroleum products, especial PMS, to ascertain daily national consumption and eliminate smuggling,” the FMPR stated in a statement.

To ensure sanity in the supply and distribution across the value chain, Sylva directed the NMDPRA to ensure strict compliance with the government approved ex-depot and retail prices for PMS.

The ministry stated that other members of the committee include the Minister of Finance; Permanent Secretary, Ministry of Petroleum Resources; National Economic Adviser to the President; and Director-General, Department of State Services.

Others include the Comptroller-General, Nigerian Customs Service; Chairman, Economic and Financial Crimes Commission; and Commandant-General, Nigerian Security and Civil Defence Corps.

The Chief Executive, NMDPRA; Governor, Central Bank of Nigeria; Group Chief Executive Officer, NNPC Limited; Special Advisor (Special Duties) to the HMSPR; were also listed as members of the committee, while the Technical Advisor (Midstream) to the HMSPR would serve as secretary.

The Punch

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Economy

CBN Raises Interest Rate to 17.5%

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The Monetary Policy Committee of the Central Bank of Nigeria has voted to increase the benchmark interest rate by 100 basis points to 17.5 per cent.

The CBN Governor, Godwin Emefiele, disclosed this while reading the communiqué of the first MPC meeting of the year on Tuesday.

This is the fifth time the CBN would increase the interest rate despite advice from manufacturers and some key stakeholders.

The CBN said previous increases were beginning to yield results with the slight drop in the inflation rate recorded in December 2022.

However, the CBN stressed that there was a need to keep tightening its fiscal policy.

The CBN keeps the asymmetric corridor at +100/-700 basis points around the MPR.

The CBN also retained the CRR at 32.5 per cent while the liquidity ratio was kept at 30 per cent.

The apex bank had increased the MPR from 11.5 per cent earlier last year to 16.5 per cent across four consecutive rate hikes in 2022.

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Economy

Old Naira Notes: No going Back on January 31 Deadline, CBN Insists

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The Central Bank of Nigeria (CBN) has declared that it will not extend the January 31 deadline for N1,000, N500 and N200 notes to cease being legal tender despite pressure from Nigerians on the need for an extension of the deadline.

The apex bank also warned commercial banks in the country to desist from dispensing the old naira currency through their Automated Teller Machines (ATMs) or face sanction from the bank.

Addressing traders at the Katsina Central Market Thursday on the need to change their old currency, the CBN Director of Currency Operations, Ahmed Bello Umar, said there is no plan to extend the deadline.

The old notes are expected to be out of circulation by January 31 yet there is scarcity of the new notes as banks keep dispensing old notes to their customers across the country.

But Umar explained that the apex bank has enough new naira currency which have since been distributed across commercial banks for onward disbursement to their respective customers through ATMs.

He added that the management of the CBN has directed that from Friday last week, “all ATMs must carry only new notes. If the banks don’t have the new notes they should not load the old notes”.

He said: “The January 31 deadline is fast approaching and the CBN has no plan to extend the deadline. So, all those who have the old notes should please take them to their banks so that they will be exchanged or credited to their accounts.

“We are going round towns and cities in Nigeria to ensure that all the ATMs are loaded with new notes. And there is relaxation on the policy, they can dispense any of the notes either N1,000, N500 or N200 notes.

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