China Grants Nigeria $500M Loan for Kano-Lagos Railway

A special delegation from the Chinese government led by Deputy Chief Inspector of China EXIM Bank – Mr Yi Zong Hua, has promised that the team will work assiduously with its Nigerian counterpart towards ensuring that the Concessional loan to the tune of $500 million loan is drawdown to enable Kano-Lagos Railway project to take-off by February 2010.
Mr Hua also stated that apart from the railway construction project, other issues in the delegation’s agenda include the satellite project and new project proposals, as well as submission of data for future study in respect of the latter.
Speaking during their visit to his office in Abuja, the Finance Minister, Dr. Mansur Muhtar stated the gvernment had restated the need to kick-start the Nigeria Railway Modernisation Project Phase 1constituting the Lagos-Kano axis and expressed confidence that the visit will afford the technical teams from both countries to finalise arrangements for the drawdown of the USD500 Million Concessional Loan for the railway project, which China has granted Nigeria.

Dr. Muhtar said that Nigeria has met all conditions precedent to drawdown which included provision of the counterpart funding, submission of feasibility report, environmental impact assessment and contract agreement for the project. He said the delegation’s visit is coming at the heels of the visit of Chinese Foreign Minister to Nigeria and is an indication that practical steps can now be taken to actualize the loan facility and kickstart the railway modernization project.

Also at the occasion the Transport Minister, Alhaji Ibrahim Bio added that the Government has met its obligation by providing the counterpart funding in the supplementary budget and urged China to effect a drawdown on the USD500 million loan so that the project can takeoff in February 2010.

Further speaking at the meeting, the Chief Economic Adviser to the President – Alhaji Yakubu Tanimu, mentioned the need to conclude negotiations on Phase I of the railway modernization project, and start negotiations on the phase II project.

He mentioned that the project has been rescoped and the second phase will cover a speed rail for the Lagos – Ibadan axis to enable people to commute easily from both ends.

It would be recalled that the Chinese Government initially offered a concessional loan facility of USD500 million to Nigeria in 2006 to be initially utilized for infrastructural projects consisting of railway, IT and Rural Telephony. 

However, in a stakeholders’ meeting held in August 2009, the Finance Minister of Finance disclosed that Pressident Umaru Yar’Adua had directed that the entire loan amount be applied to railway modernization projects and that the Federal Ministry of Transport should prosecute the projects in segments with due attention to geographical balance.

Following FGN’s decision, the implementation of the main contract for the Railway Modernisation Phase 1: Abuja –Kaduna was kick-started, while the second segment of the contract will comprise the Lagos – Ibadan stretch.


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