The Senate Committee on Foreign and Local Debts has faulted some of the terms attached to the $5.8 billion loan being offered to Nigeria by the China Exim Bank for the railway projects.
In particular, the condition requiring that the funds must be used for contracts to be executed solely by Chinese construction firms has raised eyebrows.
The committee chairman, Senator Shehu Sani, speaking at a meeting with the Minister of Finance, Mrs. Kemi Adeosun, on Tuesday noted that local content for the railway projects should have been taken into consideration during the negotiation for the loan, in addition to the quality of the projects.
Sani emphasised that it would be an issue to maintain that only Chinese firms could execute the contracts.
“We have raised it here, that for China to lend us $6 billion and for Chinese companies to execute the contracts, that is an issue. We want a situation whereby local content for the critical parts of the projects are taken into consideration.
“One issue being raised also is the fact that these loans will be for projects that will create jobs. We will not like to see Chinese labourers taking all the jobs,” he said.
He added: “Another issue has to do with the quality of the projects. If we are going to borrow such heavy amounts of money and these loans attract considerable interest, then the trains and the rail lines that will be constructed in Nigeria should match those of Europe, the United States and China.
“We will not like to leave behind a pile of debts for future generations without projects that are commensurate with the loans.”
Speaking further, Sani said some of the states in the country had become so indebted in the last 16 years that they do not qualify for any new loans.
“We have to depart from the culture of the past whereby funds and loans were collected in the name of projects, but were shared with cronies and friends and allotted to political projects. That will not be accepted and that is why this time around, we are being very careful,” he said.
Adeosun, in her submission, told the committee that the major condition tied to the loan was that Chinese firms would execute the projects for which the loans were being sought, adding that the China Exim Bank loan was highly competitive.
The minister added that Nigeria almost lost its credibility in accessing Chinese loans, after the country defaulted in its counterpart funding under the last administration. This was, however, restored by the president’s state visit to China in 2015, she said.
“Concerning the execution of railway projects, it lies with the Ministry of Transportation. Ours is to facilitate the loan,” she told the committee.