…debt servicing gulps N1.57tn in six months
Minister of Transportation, Rotimi Amaechi, has said the Federal Government would require about $5.3 billion loan from China to fund the Ibadan-Kano standard gauge rail project.
Amaechi disclosed this over the weekend after inspecting the Lagos-Ibadan rail project, saying the Ibadan-Kano rail project would take-off once the loan was received.
“We are waiting for approval of the loan. But you will see skeletal activities even before the loan comes. We have not got the loan, but for the Lagos-Ibadan rail project, there is enough money and we have no problem with this project. When we asked the National Assembly to stop the investigation into loans collected for the rail project, it didn’t mean there is no money to complete the Lagos-Ibadan rail project, but what we meant is that they should please allow us to get $5.3 billion loan for the Ibadan – Kano rail project before they start investigating loans. For the Lagos-Ibadan rail, we have a loan of $1.6 billion and Nigeria is contributing between $200 million and $300 million. If your lender knows that your people are complaining that they don’t like the way he lent you loan, he won’t lent you any new loan. Don’t forget, the Chinese have not completed the payment to Nigeria so, they could stop at any time,” he said.
The minister is scheduled to appear before the House of Representatives on Treaties, Agreements and Protocol, over the $400 million loan from China.
Amaechi is expected to appear alongside the Minister of Finance, Zainab Ahmed and the Director General of the Debt Management Office (DMO), Patience Oniha.
Chairman of the committee, Ossai Nicholas Ossai, who confirmed this, yesterday, said the lawmakers are looking forward to meeting with the ministers and others to get clarification on the loan.
“We started the last investigation last month but they could not provide the required answers so we shifted till August 17 to enable them furnish us with all the documents. So, we are expecting him,” Ossai stated.
The lawmaker explained that the committee was not doing anything extra-ordinary, stating that the committee was only discharging its oversight functions.
Daily Sun gathered that the ministers are expected to furnish the committee with the details of the agreement between the Ministry of Transport and ZTE (Nig) Ltd in respect of the provision of community actions and signalling equipment for the Itakpe-Ajaokuta-Warri line.
Also, they are to make available to the committee the agreement between the Ministry of Transport and the China Railway Construction Company International (CRCCI), as it concerns the Itakpe-Abuja line/New Port in Warri project.
The lawmakers at an investigative hearing on July 28, had raised concerns over some clauses in the $400 million loan agreement, which allegedly waived Nigeria’s sovereignty to China in case the country defaults in the repayment plan.
Ossai had pointed out that clause 8 (1) of the $400 loan agreement signed by Ministry of Finance (borrower) on behalf of the country and the Export-Import Bank of China (lender) on September 5, 2018, stipulates 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
The Transport minister, who was present at the investigative hearing, had appealed to the committee to discontinue the probe of the proposed, for now, so as not to give the Chinese government the impression that the legislature was not in support of the country obtaining the loan.
Meanwhile, the Federal Government spent a total of N1.57tn on debt servicing in the first six months of the year, the Minister of State for Budget and National Planning, Mr Clem Agba, has said.
Agba said this in a presentation that was made available to our correspondent in Abuja on Sunday by his Special Assistant on Media, Ojeifo Sufuyan.
He said of on government’s expenditure performance, N9.97tn was appropriated, while N4.45tn, representing 89.3 per cent of the pro rata N4.99tn was expended.
The minister stated that out of the expenditure, N1.57tn was for debt service, and N1.61tn for personnel cost, including pensions.
He disclosed that as of end of June 2020, only N444.75bn had been released for capital expenditure, largely due to the budget revision exercise.
Agba, however, noted that this had increased to about N1bn by July 2020.
The minister said the country was cutting its crude oil production by about 300,000 barrels daily to keep agreement reached by members of the Organisation of Petroleum Exporting Countries and its allies.
Agba said the decision to cut crude oil production by OPEC and its allies, a group that is popularly referred to as OPEC+, was in order to stabilise the global oil market.
The minister said, “Crude oil prices declined sharply in the world market, with Bonny Light crude oil price dropping from a peak of $72.2 per barrel on January 7, 2020 to below $20 per barrel in April 2020.
“In effect, the $57 crude oil price benchmark on which the 2020 budget was based became unsustainable.
“Another key development in the international crude oil market is the massive output cut by OPEC and its allies (OPEC+) to stabilise the world oil market, with Nigeria contributing about 300,000 barrels per day of production cuts.”
Agba added, “The impact of these developments is about 65 per cent decline in projected net 2020 government revenues from the oil and gas sector, with adverse consequences for foreign exchange inflows into the economy.”
It was gathered that the minister’s submissions were presented to the House of Representatives Committee on Finance at an interactive session on the 2021-2023 Medium-Term Expenditure Framework and Fiscal Strategy Paper.
On the country’s revenue performance from January to June 2020, the minister stated that as of the end of June 2020, the Federal Government’s retained revenue was N1.81tn, 68 per cent of prorate target.
He said that the Federal Government’s share of oil revenues was N859.1bn, representing 169.48 per cent performance over and above the prorated sum in the revised 2020 budget.
Agba said non-oil tax revenues totalled N581.23bn, representing 72 per cent of revised target.
He said, “Companies Income Tax and Value Added Tax collections were N301.06bn and N85.4bn, representing 73 per cent and 60 per cent respectively of the pro rata revised targets for the period.
“Customs collections was N184.36bn (82 per cent of revised target), while other revenues amounted to N372.04bn, a lowly 28 per cent of target.”
He said the NLNG dividends, recoveries and stamp duty collected during the period had, however, yet to be booked in the fiscal accounts.
