FG Secures $1.5bn Chinese Loan to Fund Lagos-Ibadan Rail Project

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Omololu Ogunmade in Abuja
The Minister of Transportation, Mr. Rotimi Amaechi, yesterday disclosed that the federal government had secured $1.5 billion (about N450 billion) counterpart funding from China to fund Lagos-Ibadan rail project designed to commence in March this year.

The minister who made the disclosure when he appeared before the Senate Committee on Land Transport to defend the 2017 budget proposal of his ministry, also urged the National Assembly to approve $30 billion loan request made by President Muhammadu Buhari which the Senate had earlier rejected.

According to Amaechi, both the Lagos-Ibadan rail project and Lagos-Kano rail project would take-off in the first quarter of 2017 adding that the ministry had also put the machinery in place to commence another rail project from Apapa seaport to Ogun State. He said the Apapa seaport-Ogun rail project will terminate in Ibadan
The Lagos-Ibadan rail line is a segment of the Lagos-Kano railway project, which is one of the most important infrastructural targets of the government.

Whereas the government had in January this year, announced a release of N72 billion as Nigeria’s counterpart funding for the Lagos-Ibadan rail project, Amaechi explained that the $1.5 billion counterpart funding had been approved by China and was currently being processed by the China Exim Bank.

“The counterpart funding is ready but don’t forget that we are borrowing the money from China. The China Exim Bank is processing it. Our 15 per cent is ready. So, we are waiting for China Exim Bank. They have managed to approve $1.5 billion for the Lagos-Ibadan line.

“It is also envisaged that segment three of the Lagos-Kano rail project, which is the Kano-Kaduna stretch, as well as the first phase of the coastal railway line Lagos-Calabar, commencing from Calabar to Port Harcourt with extension to the Onne Deep Seaport will commence after the conclusion of the negotiation of a financing loan agreement,” he said.

While urging the National Assembly to approve the $30 billion national (rolling) borrowing plan of the government, Amaechi said the approval was required to secure funds needed to finance rail projects in the country.

“The National Assembly needs to give us approval for the borrowing plan so that we can commence work. We can’t sign the loan agreement with China unless there is an approval from the National Assembly.

“What the National Assembly has approved is the counterpart funding but we need the approval to borrow the remaining money. If you look at $6.1 billion in naira, and we are paying 15 per cent, you will know that the remaining amount is coming from China and until we have approval, we cannot do anything. Even now, the China Exim Bank has approved $1.5 billion for the Lagos-Ibadan line. We are not able to sign the loan agreement because we need the approval of the National Assembly,” he added.
On the performance of the 2016 budget, he said uncompleted projects in the previous year had been included in the proposed 2017 budget.

In his comment, the Chairman of the Committee, Senator Gbenga Ashafa, assured Amaechi that the Senate would cooperate with the ministry in its plan to implement the infrastructural plans in the budget.