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$500m Chinese loans: Reps, Amaechi, Finance Minister at daggers drawn over sovereignty clause

The House of Representatives members and the Minister of Transportation, Chibuike Ameachi, yesterday engaged in verbal exchanges over the $500 million Chinese loan Nigeria was seeking for rail projects.

The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, was not left out of the heated argument that trailed the propriety of the loan, especially against the backdrop of the clause embedded in the loan agreement between Nigeria and China which lawmakers saw as mortgaging the country’s sovereignty.

While the lawmakers said the clause was inimical to the security and development of the country, the ministers said it was universal standard practice.

The lawmakers were also at war with the transport minister for agreeing to have a Chinese colony, Hong Kong, as the arbitration center on the loan agreements.

These developments played out at the resumed public hearing of the Committee on Loans, Treaties and Protocols of the House, chaired by Ossai Nicholas Ossai.

The committee is currently reviewing Nigeria’s loan agreements with countries, especially China. At present, there are about 17 loans obtained from China to fund critical infrastructure in the areas of rail transportation, Information and Communication Technology, ICT, airport terminal expansion, energy, agriculture, and water.

Committee hearing in a heated argument

The hearing had started on a friendly note, featuring the interrogation of the Director-General, Debt Management Office, Mrs. Patience Oniha, on details of the loans and later progressed to the Minister of Finance, Zainab Ahmed, who was represented by Permanent Secretary, Special Duties, Aliyu Ahmed.

The proceedings later progressed to the Minister of Transportation, Mr. Chubuike Amaechi, being questioned on the loans by the lawmakers.

Questions put to him by the chair of the committee on the local content components of the loan agreements were returned in monosyllabic answers without details.

However, Amaechi said the activities of the lawmakers would hinder the acquisition of the loans to finance the South-South rail projects, adding that the only loan secured by the present government so far was the NI.6 billion for the Lagos -Ibadan rail project.

“We may not get that loan. We will lose that contract from Lagos to Calabar, because of the committee you have set up,” he said. But when the committee chairman said he was not talking about the South-South rail project but Nigeria at large, Ameachi retorted:

“You have approached me on the South-South rail project. Have you not? You have. Until you get the loan, there will be no contract. And there will be no loan.”

The tone of the conversation prompted a member of the committee, Wole Oke, to call the attention of the chair for “guidance,” but the call was not heeded.

He was later to be given an opportunity to speak. With the House getting more heated up, the speaker, Femi Gbajabiamila, stormed the venue of the hearing, demanding for 10 to 15 minutes break.

“Can we, please have 10 to 15-minute break?,” Gbajabiamila pleaded.

The Chairman of the committee then formally announced a 30-minute break.

Clauses, a standard practice — Ministers

With the resumption of the hearing after 30 minutes, the Minister of Finance was questioned on the sovereignty clause, which her representative noted was standard practice globally.

“It is a standard clause in a number of commercial agreements worldwide. I am aware of the circular. In the event you have a dispute, you can go to arbitration,” he said.

Not satisfied, the permanent secretary was asked to produce the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed tomorrow.

Also speaking on the issue, Amaechi said it was the standard practice when obtaining loans, stressing that 80 percent of the loans were negotiated by the previous government. Noting that local content was also factored into the loan, Amaechi pleaded with the committee not to chase the Chinese away with its stance.

“These are standard clauses you have before you can get the loan. 80 percent of these loans were taken before we came. And they are standard clauses. “Doors and windows made by China were rejected, we insisted that we can make our own here. Rods and other items can be sourced here.  The one I signed, which is commercial contracts, Lagos is the arbitration center.

“When China hears what you say now, they won’t give us these loans. Once you sign, you are bound by the law. Let’s get funds to do our projects,”

Amaechi said He, however, promised to make available documents showing the detailed components of the local contents. But in response, Ossai retorted:

“I disagree completely. They are no standard clauses. Well, that issue concerns national security. We can do that again. Our own is to interface adequately on the issues.”

Ministers, such as Minister of Works and Housing, Babatunde Fashola, the Minister of Federal Capital Territory, FCT, Mohammed Bello, the Minister of Communication, Ali Pantami, among others, who were around to make presentations were asked to return tomorrow.

The loan clauses

Meanwhile, documents containing some of the loan agreements sighted by Vanguard, made it mandatory for Nigeria to purchase the technologies, goods, and services with which to build the infrastructure from China.

The document also revealed that before the first tranche of loans, otherwise referred to as the first drawdown, can be secured, Nigeria must make 15 percent of the contract sum in advance.

In his earlier opening remarks at the hearing, Ossai said it was the responsibility of lawmakers to ensure that Nigerians were not shortchanged in the loan processes.

He said: “The National Assembly, through this committee, will work to ensure that proper due diligence is taken by various MDAs before, during, and after negotiations/signing of all bilateral loan and contractual agreements. ‘’We believe that both the government and Nigerians appreciate the fact that bilateral loan agreements are not just about infrastructural development but also a matter of national interest and national security; because the future of our children and unborn children are involved.

“As such, the aim of this committee is to review the status of these agreements to ensure that it’s done with the best interest of the Nigerian people in focus, monitor the progress of its operation, management and administration by the relevant agencies of government in line with the terms of the agreements and recommend a more transparent and open process in accordance with our enabling laws and international best practices.

“Based on public statements and reporting alone, especially since our last meeting here, we have heard/seen comments and analysis on major television networks and national dailies by key actors, which have not accurately conveyed the severity of the issues and what the current structure of these loans/contracts/agreements may portend for our nation if not properly planned and managed well.

“We have heard some people ask why we are focusing on only Chinese related loans and commercial contracts. We will like Nigerians to know that we aren’t focusing on only Chinese loans. From what we know, Nigeria has over 500 bilateral loans/commercial contracts/ agreements and investment treaties with different countries and institutions.

‘’There is no way the committee will do a thorough job without segmenting the issues based on countries, institutions, or MDAs.

Thus, it must be clearly noted that this is not targeted at only China, neither was it designed to impede the development of the railway sector and other infrastructure. ‘’It is rather to ensure full disclosure, transparency, accountability, utmost good faith, and value for money in both the bilateral loans and commercial contract agreements entered into by the Nigerian government.

“The loan agreements we have seen so far shows that government officials charged with the responsibility of representing Nigeria in these issues were more desperate to just take the loans at any condition, possibly using non-negotiated loan agreements templates rather than go through the rigor of diligent technical review of negotiating specific clauses with clarity and for the national interest.”

‘’For instance, it’s a common practice that most international loan agreements would adopt ‘Sovereign guarantee’ and a neutral international arbitration center as opposed to waiving of our national sovereignty in an omnibus manner, especially in dealing with countries like China, known to possess an absolute state status on their institutions and corporations.”


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