Rail Loan Agreements: House Uncovers Clauses eroding Nigeria’s Sovereignty to China

By Udora Orizu

The House of Representatives yesterday raised the alarm over clauses in Article 8(1) of the commercial loan agreement signed between Nigeria and Export-Import Bank of China, which allegedly concedes sovereignty of Nigeria to China in the $400 million loan for the Nigeria National Information and Communication Technology (ICT) Infrastructure Backbone Phase II Project, signed in 2018.

The controversial clause in the agreement signed by Federal Ministry of Finance (Borrower) on behalf of Nigeria and the Export-Import Bank of China (Lender) on September 5, 2018, provides that: “The Borrower hereby irrevocably waives any immunity on the grounds of sovereign or otherwise for itself or its property in connection with any arbitration proceeding pursuant to Article 8(5), thereof with the enforcement of any arbitral award pursuant thereto, except for the military assets and diplomatic assets.”

The House of Representatives has therefore summoned the Minister of Transportation, Mr. Rotimi Amaechi; Minister of Communication, Ali Isa Pantani; and Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed.

The ministers are expected to provide answers on $500 million loan to be sourced from the Export-Import Bank of China for railway lines in the country.

Also, summoned alongside the ministers is the director general of the Debt Management Office (DMO), Ms. Patience Oniha.

They are also to provide details on the agreement signed between the federal ministry of transport and the China Civil Engineering Construction Corporation (CCECC) in respect of some railway projects in the country.

The projects involved are the Abuja-Kaduna, Lagos-Ibadan, Ibadan-Kaduna and Kaduna-Kano railways lines.

Amaechi has however warned that the Chinese authorities may not sign the $5.3 billion Ibadan-Kano rail line loan if the lawmakers continue to investigate the agreement.

Chairman of the House committee on Treaties, Protocol and Agreements, Hon. Ossai Nicholas Ossai issued the summons yesterday at the public hearing with MDAs on review of Nigeria’s bilateral loan agreement.

Ossai said they are expected to appear on August 17, unfailingly with details of the contracts concerned.

He said, ‘’The House would need details on the agreement between the federal ministry of transport and ZTE (Nig) Ltd in respect of the provision of community actions and signaling equipment for the Itakpe-Ajaokuta-Warri line. Also, the ministers are to provide details of the agreement between federal ministry of transport and the China Railway Construction Company International (CRCCI) in respect of the Itakoe-Abuja line/ New Port in Warri project.’’

The Committee raised alarm over alleged waiver of Nigeria’s sovereignty in the government concessions agreement on Nigeria National Information and communication technology infrastructure backbone phase II project between the government of Nigeria, represented by the Federal Ministry of Finance(borrower) and the Export-Import Bank of China (lender) dated September 5, 2018.

The Committee cited Article 8(1) of the agreement, which states that “the borrower hereby irrevocably waives any immunity on the grounds of sovereign or otherwise for itself or its property in connection with any arbitration proceeding pursuant to Article 8(5), thereof with the enforcement of any arbitral award pursuant thereto, except for the military assets and diplomatic assets”.

But in his presentation, Amaechi said the loan being sourced by his ministry is a total of $500 million to complete the Lagos -Ibadan railway line, which he put at a total of $849 million, with $349 million as counterpart funding.

He explained that because China,which is giving the loan is sensitive and monitoring happenings in Nigeria, the House committee might wish to give him till end of December when all the loan would have been received.

Amaechi argued that the constant investigations by the National Assembly might give the impression that a part of the government does not approve of the loan and the Chinese government may withdraw the loan.

He appealed to the committee to consider national interest in carrying out their oversight function.

‘’My fear is that if this probe continues, at the end of the day, some sections of the country may suffer. In oversighting, there is what is called national interest. But in asking questions on these loans now, it may jeopardize these loans. The Lagos- Ibadan is not completed; the Ibadan- Kano is not completed.’’

“Let the government of China not say there is a disagreement in government on this loan and so we will not give this loan. So, I appeal to the chairman to give us from now till December, when we are likely to secure the loans. Then, from January, February, you can resume this investigation.’’

He added that the railway projects (Lagos-Ibadan, Ibadan- Kano) are yet to be completed and these will be affected.

However, Amaechi’s plea was not taken as the Committee Chairman insisted that the minister should return to the committee on August 17 with other ministers to give details of the contract agreements.

Ossai said: ‘’We are looking for transparency, which is what the Chinese government wants. So, we will like to have the pre-payment plans for these loans. Most of these contracts signed by the government are not known by the National Assembly as provided for in the DMO Act; and we are supposed to know. We need to know how many Chinese are involved in these projects and their expertise. In the documents we have seen there are variations in interest rates. Why do you sign these documents at the same time with different interest rates.’’