Open Sinking, Escrow Accounts to Repay Your Debt, China Tells Nigeria

Former Minister of Transportation, Mr. Rotimi Amaechi

Kasim Sumaina in Abuja

The Chinese Government has advised its Nigerian counterpart to as a matter of priority, open a sinking fund and an escrow account to be able to seamlessly repay the loans which it borrowed from the Asian country for the construction of rail projects, particularly the Abuja-Kaduna rail.

Two years after the commencement of operation of the Abuja-Kaduna railway, the federal government has stated that it was yet to commence the repayment of over $500million Chinese loan for the standard gauge rail line.

The Minister of Transportation, Mr. Chibuike Ameachi, disclosed this Thursday during his valedictory press briefing in Abuja.

The minister expressed dismay that the Nigerian Railway Corporation (NRC) managing director was yet to follow his directive to create a sinking fund or escrow account that can be used to pay back the loan, saying it is important that the ministry start repayment even before the federal government starts.

Amaechi stated that the Nigerian Government is seeking another $1.8 billion from the China Exim Bank for the construction of the coastal rail line, noting that federal government had not paid any of the Chinese loans even though full commercial operation had commenced on the Abuja-Kaduna railway corridor.

According to him, “The NRC had announced that their revenue generation had increased by 400 percent in 2018 as against the revenue it was generating in 2017.

“The NRC Managing Director, Fidet Okhiria, had disclosed that in 2017, the corporation was earning N16million monthly, however, in 2018, the figure rose up to N80million monthly as against the N100million target.

“The NRC MD had initially put their cost operation on a monthly basis at N56million but later announced that their cost operation had increased to N100million, attributing it to the high cost of diesel.”

Amaechi stressed that the need to start repaying back the loan was because of the reservation of the Chinese on the inability of some African countries to repay their loan, adding that the Chinese had insisted “we open two accounts-the escrow account and the sinking fund account.”

Speaking further, the minister said: “They know I am going and that I may not come back but I want the permanent secretary to hold him to that instruction. The instruction was that all the money they realised from the Abuja-Kaduna railway line should be kept in an account and the cost operation should be removed while the remaining one should be used to pay back the loan.”

He further observed that the Chinese wanted them to put repayment fund in the sinking fund account annually while the money of the management of the operation should be put in the escrow account.

Amaechi, however, noted that the actual cost of the coastal rail line project was $2.3billion, saying the federal government was expected to pay $500million counterpart fund.

The minister, while speaking on the botched national carrier, ‘The Nigeria Air’, revealed that members of the Federal Executive Council (FEC) was divided on the modality for its establishment.

He explained that members of the federal cabinet had different beliefs and positions regarding the establishment of a national carrier for Nigeria, but noted that the project had not been abandoned.

According to him, “On the national carrier, the cabinet is divided on the issue of modality. There are those who believe that the federal government should invest and then we can sell the equity later.

“There are also those who believe that, from day one, let us get the investors involved and give them the franchise of Nigeria Airways or Air Nigeria or whatever it’s called.

“That is where we are and that is what held it down. But as for whether it is still in our plan, it is and has not been abandoned.”