According to data obtained from the Debt Management Office, Buhari’s administration has borrowed a total of $2.02 billion in loans from China since 2015 till date.
The Statistics obtained from DMO also revealed that Nigeria’s total debt from China as of 30th of June 2015 stood at $1.38 billion.
As of 31st of March 2021, the country’s total debt portfolio with China has surged to $3.40 billion.
According to the DMO, loans from China are concessional loans with interest rates of 2.50 percent per annum, a tenor of 20 years and a 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 projects. The projects, (eleven in number as of 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 revealed that the low interest rates on the loans reduced the interest cost to the government while the long tenor enabled the repayment of the principal sum of the loans over many years.
Since the third quarter of 2015, the nation’s total debt service payment made to China stood at $719.61 million as of 31st of March. $332.03 million or 46.15 percent of the total debt service was paid to service the interest on the loans.
In the first quarter of 2021, $102.19 million was used to service debt to China. This is about 11 percent of the total $1.0 billion used to service external debts within the period.
The DMO recently disclosed that Nigeria had more than $5.83 billion foreign loans that had been approved but not yet disbursed as of December 31, 2020.
Out of this amount, $1.25 billion 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.
The fear grew when the Minister of Transportation, Rotimi Amaechi, in August 2020, confirmed that the country waived its sovereign immunity to obtain Chinese loans.
The minister, however, added that as long as debts were repaid, there would be no need for China to claim any infrastructure.
“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.
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.”