Nigerian Bank Nigeria – Government Eager To Get Funds For Railway Project

Source Next: Bassey Udo, January 24th 2010

The federal government has indicated that it wants work to commence work on the first phase of the Nigerian Railway Modernisation Project next month.

Mansur Muhtar, the Minister of Finance, and Ibrahim Bio, his counterpart in the Ministry of Transport, as well as Yakubu Tanimu, the Chief Economic Adviser to the President, are worried about the delay in finalising arrangements with the Chinese government over the $500 million concessional loan facility extended to Nigeria since 2006.

The three officials expressed their concerns when a delegation from the Chinese EXIM Bank visited Mr. Muhtar in continuation of discussions on modalities for accessing the facility.

The concessional facility, which was initially granted to assist in the execution of some key infrastructure projects in the country, including the railway system, IT and rural telephony, was later converted for use entirely on the railway modernisation project following an approval by President Umaru Yar’Adua.

The project, which is expected to be executed in two phases due to geographical considerations, would see the construction of the first phase covering the Lagos- Abuja– Kaduna-Kano axis, while the second phase would cover the Lagos– Ibadan stretch.

Meeting the conditions

Mr. Muhtar expressed optimism that the visit of the delegation, coming on the heels of the recent visit of the Chinese foreign minister to Nigeria, is an indication that practical steps are being taken to access the loan facility and kick-start the railway project.

The minister disclosed that the Nigerian government has fulfilled all conditions required to facilitate access to the loan, including the provision of counterpart funding, submission of comprehensive project feasibility report, an environmental impact assessment report and a contract agreement for the execution of the project.

Mr. Bio disclosed that a provision has been made in the 2009 supplementary budget, to cater for the counterpart funding, stressing the need for action to be expedited on the take off of the project, considering that the supplementary budget has life span of three months ending in March 2010.

“There is an urgent need for China to fast-track the process that would see the project take off by latest February,” he said.

In his contribution, Mr. Tanimu, said there was the need to conclude negotiations on Phase 1 of the project, to make way for the commencement of negotiations on the second phase, pointing out that the scope of the project has been reviewed, with the second phase designed to cover a speed rail for the Lagos – Ibadan axis.

The August 31, 2009 deadline for applying for a portion of the $3 billion Africa’s share of the Chinese $10 billion global loan facility was met by the government, to qualify Nigeria to utilise $1 billion for the execution of the Abuja Light Rail Mass Transit Project and National Railway Modernisation Project.

China wants further discussions

Yi Zong Hua, the head of the Chinese delegation, who is also the Deputy Chief Inspector of China EXIM Bank, gave assurances that the technical team is prepared to work with its Nigerian counterparts within the short period of its visit to resolve all issues relating to the accessibility of the loan for the project to take off before the end of next month.

Though the Chinese authorities noted government’s anxiety to see the project commence as envisaged, the delegation said further discussions would take place only after the $500 million Preferential Buyer’s Credit (PBC) had been utilised by Nigeria.

Mr. Hua indicated the delegation will also discuss Nigeria’s satellite project during its stay.

Nigerian Bank Nigeria