Again, Nigeria’s Debt Set To Rise As FG Plans Fresh N2.07trn Loan For Railway Projects
The Federal Government is to borrow a fresh sum of $5.467bn for the development of the country’s railways.
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The Minister of Transportation, Rotimi Amaechi said this while speaking on a breakfast programme “Kakaaki” on African Independent Television.
Based on the N379 to a dollar official exchange rate of the Central Bank of Nigeria, the $5.467bn translates into the sum of N2.07trn
Amaechi said that the amount was needed for the development of the second phase of railway projects, adding that through the project, the government would be able to link major cities across the country.
The minister said the only way government could boost trade and economic activities was to have a modern railway system.
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He said while the Federal Government had estimated that about $30bn would be required to effectively finance all the rail projects, it is starting with the $5.467bn loan.
Giving a breakdown of the $5.467bn loan, Amaechi said that the government is planning to borrow the sum of $1bn (N379bn) from the Chinese government while $1.9bn (N720.1bn) would be sourced from an European Bank.
The $1.9bn, according to the Minister, would be used to finance the Kano-Maradi Railway project.
Similarly, he said the sum of $3.02bn (N1.182trn) would be borrowed by the government for the construction of Port Harcourt -Maiduguri segment of the railways, adding that out of the $3.02bn, the Federal Government would provide 15 per cent as counterpart funding.
This implies that effectively, the Federal Government would be borrowing about $2.567bn (N972.89bn) out of the $3.02bn (N1.182trn)
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The Minister said, “We have borrowed $1.6bn for Lagos-Ibadan (railway project) and that is where we stopped.
“What we think we need is $30bn bit what we are going to borrow now to commence the phase two of our construction is $1bn and we are in conversation with the Chinese government.
“We are so going to borrow $1.9bn from an European Bank to construct Maradi-Kano rail. We are also going to borrow $3.02bn and we are going to contribute 15 per cent of that for Port Harcourt-Maiduguri.”
Nigeria’s total public debt stock had in recent times being on the increase as a result of the drop in revenue generation.
The debt stock increased from N28.628trn ($79.303bn) as of March 31, 2020 to N31.009trn ($85.897bn) by June 30, 2020, statistics released by the Debt Management has said.
The increase in the debt stock by N2.381trn or $6.593bn was
accounted for by the $3.36bn Budget Support Loan from the International
Monetary Fund, new domestic borrowing to finance the revised 2020
Appropriation Act including the issuance of the N162.557bn Sukuk, and
Promissory Notes issued to settle claims of exporters.
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Amaechi also said that economic consideration informed the decision for the approval of the construction of railway line from Kano to Maradi in Niger Republic.
He urged Nigerians to consider the huge employment opportunities the project would generate as well as the mileage of import and export between Nigeria and neighbouring countries.
He added, “The decision to invest in Kano-Maradi rail line is purely economical, no politics. People are the ones politicising it.
” I made that decision because there is a competition between the coastal states of Nigeria, Benin Republic, Togo and Ghana.
“The other three countries are able to move cargoes from these landlocked countries to their seaports for either exports or imports.
“They are able to do those businesses but we are not able to do them because the landlocked countries are complaining of crimes. Road are not safe in Nigeria. There is custom interference as well as Police checkpoints here and there.
“Therefore, they find it difficult to do business in Nigerian seaports. So to be able to attract those cargoes, we decided to construct a rail line from Kano to Maradin, a village in the Niger Republic and we will also build warehouses there to be able to attract cargoes from neighbouring countries and transport it effectively to Tin-Can or Apapa seaport for movement onward or outside the count”
He said the Ministry of Transportation would continue to work with the Ministry of Finance to expand railway projects across the country even as he assured that debts incurred in the process would be repaid.
