The Senate, on Tuesday, approved a new Chinese bank – China Development Bank – to fund the Kaduna-Kano railway project after China Exim Bank withdrew its financial support.
The Senate and House of Representatives had approved China Exim Bank as the financier of the railway modernisation project of the Kaduna-Kano segment in March and June 2020.
However, amid the COVID-19 breakout, China Exim Bank, earlier billed to support the railway project with $22,798,446,773 loan, withdrew from the infrastructure project.
The National Assembly had approved the $22,798,446,773 loan and China Exim Bank as the financier under the Federal Government’s 2016-2018 s external borrowing plan.
“The 2016-2018 Federal government external borrowing (rolling) plan was approved by the Senate and the House of Representatives on March 5, 2020, and June 2, 2020, respectively,” Senator Sadiq Umar (APC Kwara North) stated while moving a motion during plenary on Tuesday.
Umar further stated: “the National Assembly approved the sum of $22,798,446,773 (twenty-two billion, seven hundred and ninety-eight million, four hundred and forty-six thousand, seven hundred and seventy-three United States Dollars) only under the 2016-2018 Medium Term External Borrowing (Rolling) plan.”
He said the Federal Ministry of Finance requested to review the terms approved in 2020, as it seeks to substitute China Exim Bank with China Development Bank.
The Senate approved modifications to the initial terms, which saw the loan reduced from $22,798,446,773 to $973,474,971.38, with China Development Bank becoming the new creditor.
Also, the new terms state that the loan has 15 years maturity, with 2.7 per cent + six months Euribor. The loan term comes with a commitment fee of 0.4 per cent and an upfront fee of 0.5 per cent. The loan will be provided in Euro currency.
Addressing the $973.47 million loan expected to be obtained from China Development Bank, the Senate President, Ahmad Lawan, said it does not constitute a new loan, but modifications of previously approved but yet to be obtained facility.