Nigeria’s Minister of Transportation, Rotimi Amaechi, has clarified the Sovereign Guarantee clause in the loan agreement taken from the Chinese government for construction of infrastructures in the country.
Rotimi Amaechi in a statement on Saturday said Nigeria was not in anyway ceding its sovereignty to China, clarifying that the Sovereign Guarantee clause in the loan agreement was to assure China that it can take over the asset constructed with the loan, should Nigeria default.
He said “The terms contained in the agreement is not as if we are signing off the country’s sovereignty. What we do is that we give a sovereign guarantee, which is an immunity clause. The clause is that in case the country defaults, China will come to collect the items agreed upon.”
The minister assured that the Chinese would not take over assets that were not constructed with the money, in case of default. And should the asset depreciate; then the country can discuss other assets they can take over to recoup the loans.
He disclosed that the Nigerian Government is seeking the National Assembly’s approval for $22.5b loan from China for railway modernisation. A breakdown shows that Federal Government is seeking $5.3b for the construction of Ibadan-Kano railway line, $3b for Port Harcourt to Maiduguri, $11.1b for Lagos-Calabar and $3.5b for Abuja to Itakpe.
He noted that the interest rate on the loan is about 2.8 percent, spanning a period of 20 years and has seven-year moratorium, saying with such terms, it is impossible the country will not be able to pay back within that period.
He disclosed that the Federal Government has started paying back $36m out of the $500m loan collected by the Goodluck Jonathan administration for the construction of Abuja-Kaduna standard gauge railway.
On why he is asking the National Assembly to stop probing the loan, Amaechi said: “If you frighten the Chinese that they won’t recoup the loan, they will pull back. They want us to show them evidence that we will pay back, and one of the evidences is that waive backs the immunity clause, so that they can take their asset. It is the immunity clause that is being debated.”
The Minister further called on the National Assembly and Nigerians to appreciate the efforts of the Nigerian Government in providing infrastructures in the country.