Business
Nigeria’s Chinese Debt Skyrockets By $800 Million In One-Year Span
Nigeria’s debt to China rose by $800 million in the span of one year, increasing from $3.93 billion as of June 30, 2022, to $4.73 billion as of June 30, 2023.
This marks a 20.36% surge from the second quarter of 2022 to Q2 2023, according to analysis based on data from the Debt Management Office.
Despite the Federal Government maintaining secrecy about the terms of the China loans, the DMO has previously made some statements regarding them.
Recall that in a statement in June 2020, the DMO said, “The total borrowings from China of $3.121bn as of March 31, 2020, are concessional loans with interest rates of 2.5 per cent per annum, tenor of 20 years and grace period (moratorium) of seven years.”
As per the Debt Management Office (DMO), the terms of the loans from China align with Section 41 (1a) of the Fiscal Responsibility Act, 2007.
The loans feature a low interest rate, minimizing the government’s interest costs, and a prolonged tenor, facilitating the repayment of the principal sum over an extended period.
In a document titled ‘Status of Chinese loans as at September 30, 2021,’ the DMO revealed that 15 projects, spanning water supply, power generation, railways, airport terminals, communication, and agricultural processing, were funded by these loans.
The initial loan project, the Nigerian Communications Satellite project, involved $200 million and was agreed upon on January 12, 2006.
This five-year loan matured on June 29, 2018, and Nigeria successfully paid it off. The interest rate was three percent per annum, resulting in a payment of $40.02 million in interest.
The second loan, for the Nigerian national public security communication system project, amounted to $399.50 million and was agreed upon on December 20, 2010, with disbursement.
The third loan supported the Nigerian railway modernization project (Wu-Kaduna section) with $500 million, agreed upon on December 20, 2010, and disbursed.
The fourth loan, directed at the Abuja light rail project, amounted to $500 million and was agreed upon on November 7, 2012, with subsequent disbursement.
The fifth loan targeted the Nigerian Information and Communication Technology infrastructure backbone project, involving $100 million and an agreement reached on January 5, 2013, with disbursement.
The sixth loan was allocated for the expansion of four airport terminals (Abuja, Kano, Lagos, and Port Harcourt) with $500 million agreed on July 10, 2013. However, only $455.28 million, equivalent to 91.06 percent of the agreed amount, was disbursed.
The seventh loan, designated for the Nigerian Zungeru hydroelectric power project, amounted to $984.32 million, agreed upon on September 28, 2013. However, only $518.24 million, representing 52.65 percent of the agreed amount, was disbursed.
The eighth loan, allocated for the Nigerian 40-parboiled rice processing plants project under the Federal Ministry of Agriculture and Rural Development, amounted to $325.67 million. This agreement was reached on April 26, 2016, but no disbursement occurred.
The ninth loan, dedicated to the Nigerian railway modernization project (Lagos – Ibadan section), amounted to $1.27 billion, agreed upon on August 18, 2017. However, only $759.84 million, equivalent to 17.50 percent of the agreed amount, was disbursed.
The tenth loan aimed at the rehabilitation and upgrading of the Abuja-Keffi-Markurdi road project with $460.82 million, agreed on August 18, 2017. However, only $80.64 million, representing 59.96 percent of the agreed amount, was disbursed.
The eleventh loan, intended for the Nigeria supply of rolling stocks and depot equipment for the Abuja light rail project, amounted to $157 million, agreed upon on May 29, 2018. Nevertheless, no disbursement occurred.
The twelfth loan, allocated for the Nigeria Greater Abuja water supply project, involved $381.09 million, agreed upon on May 29, 2018. However, no disbursement took place.
The thirteenth loan, designated for the Nigerian Four Airport Terminal Expansion Ancillary Project, amounted to $183.62 million, agreed upon on December 27, 2019. Yet, no disbursement was made.
The fourteenth loan, intended for the Nigerian Four Airport Terminal Expansion Incremental Project, amounted to $208.90 million, agreed upon on December 27, 2019. However, no disbursement occurred.
The fifteenth loan, allocated for the Nigerian ICT Infrastructure Backbone Phase II Project, involved ¥2.3 billion and was agreed upon on September 5, 2018. However, only ¥480.40 million, equivalent to a partial disbursement, was executed.
The document reveals that only the 15th loan project was denominated in Chinese Renminbi Yuan.
Additionally, it contradicts the DMO’s claim in June 2020, showing varying interest rates ranging from 2.5 percent to three percent, not exclusively fixed at 2.5 percent.
During the reviewed period, Nigeria serviced Chinese loans with $263.14 million, as observed by The PUNCH.
Data from external debt service reports indicates that Nigeria may not be obligated to make any payments in Q2, as no debt service payment for Chinese loans was recorded in both Q2 of 2022 and 2023.
Addressing concerns about potential asset forfeiture due to loan default, the Director-General of the DMO, Patience Oniha, reassured Nigerians in 2021 that the loans were predominantly concessional, and no national asset was designated as collateral.
The Nigeria Deposit Insurance Corporation (NDIC) has announced revisions to the Maximum Deposit Insurance Coverage for banks operating within the country.
NDIC’s Managing Director, Bello Hassan, disclosed the updated coverage benchmarks during a media briefing in Abuja on Thursday.
The coverage for Deposit Money Banks has been increased from N500,000 to N5 million, for Microfinance Banks from N200,000 to N2 million, for Primary Mortgage Banks from N500,000 to N2 million, and for Mobile Money Operators subscribers’ pass-through from N500,000 to N5 million per subscriber.
Hassan underscored that the objective of the update is to enhance depositor safety, foster public trust, promote the inclusivity of financial services, and ensure the overall stability of the financial sector.
More to follow.. . .. .
The 63rd Annual General Meeting (AGM) of the Nigerian Exchange Group Plc (NGX Group), held at the Nigerian Exchange Group House on Monday, April 29, 2024.
During the gathering, the Group concluded on ordinary and special business matters, while also unveiling plans to embark on a comprehensive digital transformation strategy to expand its business operations in line with its overarching strategy.
The meeting’s agenda, approved by the Board of Directors, included the declaration of a final dividend, ratifying the appointment of Temi Popoola as the Group Managing Director/Chief Executive Officer of NGX Group, presenting financial statements to shareholders, re-electing non-executive directors retiring by rotation, authorizing, and disclosing remuneration, among other undertakings.
Notably, the NGX Group, subject to regulatory approval, discussed its authorization on a rights issue to raise capital of up to N10 billion with a subjoined resolution to increase its share capital to sufficiently accommodate the rights issue.
All resolutions were approved by shareholders just as appointment and reelections of directors were ratified.
Following substantial authorization across its agenda, the NGX Group introduced plans to propel the markets with a digital transformation journey that includes an online platform for public offers and deep investments in its technology stack amongst others.
The platform will provide a smarter and efficient way for Issuers to raise capital and enhances the subscription process and operational workflow of POs in the capital market including initial public offerings (IPOs), rights issues and other public offers.
On the development, the Group Chairman, NGX Group, Umaru Kwairanga said, “I am particularly grateful to our shareholders for their assent to the critical business we conducted today. As the Board oversees the strategic direction and gives management the necessary support and guidance, we believe that the coming year will be a better one in terms of value created for our shareholders.
“NGX Group is positioned to capitalize on opportunities amid the positive and forward-looking reforms by the government and our stakeholders should rest assured we will deliver excellently.”
On his part, Group Managing Director/Chief Executive Officer, NGX Group, Temi Popoola, said, “As we complete our 63rd AGM, I extend my sincere gratitude to our shareholders, customers, employees, regulators, and directors for their steadfast support. In a year that underscored NGX Group’s strategic agility and operational excellence, we witnessed growth stemming from our dynamic revenue streams. We are optimistic and well-positioned to forge a future marked by success, resilience, and prosperity.
Addressing the digital transformation agenda, Popoola stated, “The future of our business and the capital markets hinges on technology. That is why we are driving this digital transformation journey across our subsidiaries through the Group. NGX Group’s digital transformation will democratize access to public issuances for every Nigerian with a mobile phone, supporting capital-raising efforts for companies. Additionally, we aim to commercialize our technology solutions and expand our footprint across Africa”.
Key insights and proceedings from the NGX’s AGM can be accessed via the live recording available on NGX Group’s website at www.ngxgroup.com.
. . . Firm Declares N4.5bn Dividend For 2023
The Nigerian Content Development and Monitoring Board (NCDMB) has announced that it had received an interim dividend payment of N450 million out the N1.5bn declared by the Waltersmith Refinery and Petrochemical Company Limited.
The NCDMB made the disclosure on Monday, adding that the payment represented NCDMB’s 30% share in the company for the year ended 2023.
Recall that the NCDMB had in July 2018 invested $10m to acquire 30% stake in the 5000 barrels-per-day (bpd) modular refinery project located at Ibigwe, Imo State, to support the Federal Government’s policy on modular refinery, stimulate investment and create employment opportunities.
Rising from a Board Meeting of Waltersmith Refinery and Petrochemical Company Limited, the Executive Secretary, NCDMB, Engr. Felix Omotsola Ogbe confirmed that a total dividend of N4.5bn had been approved for the year 2023, pending final approval at the Annual General Meeting (AGM).
The company reported a total profit of N23.6bn as profit after tax for the same year.
The Executive Secretary hinted that NCDMB expects to receive additional 30 percent of the outstanding N3bn dividend after the AGM is convened later this year.
He added that the receipt of this interim dividend payment was a testament to the strong performance and profitability of Waltersmith Refinery and Petrochemical Company Limited.
He said, “The NCDMB is proud to be a part of this success and looks forward to continued collaboration with the company in the future.”
He affirmed that the company was upscaling the refinery capacity from 5000 bpd to 10,000bpd and the expansion project was already 44 percent completed and on time to be commissioned by early 2025.
The NCDMB’s investment in the Waltersmith project was also geared to catalyse the industrialisation of the Nigerian oil and gas industry and its linkage sectors and deepen Nigerian Content in the oil and gas industry. It was the first third-party investment embarked by the Board, and it provided proof of concept and paved the way for other successful investments by the Board.
Two weeks ago, NCDMB received a cheque of $1 million from Nedogas Development Company Limited (NDCL), being part of the return on investment (ROI) on one of the Board’s strategic investments.
The cheque was presented by the Chairman of the company, Engr. Emeka Ene when he visited the Nigerian Content Tower in Yenagoa Bayelsa State, where he was received by the Executive Secretary, Engr. Felix Omatsola Ogbe and other members of the Board’s management.
Nedogas Development Company Limited (NDCL) is a joint venture company between Xenergi Limited and NCDMB Capacity Development Intervention Company and it culminated in the construction and commissioning of a 300 MMscfd Capacity Kwale Gas Gathering (KGG) and injection facility located in the Umusam Community, near Kwale in Delta State, Niger Delta, Nigeria.
How NERC’s New Commercial Billing Threatens Healthcare, Economy
Kwara-based Catholic School Shines In 2024 UTME: 30 Students Score Above 300
Fuel Crisis: No End In Sight As NNPC, IPMAN Fight Dirty
Vigilantes Slain, Village Heads Abducted In Kaduna Attack
Subsidy Removal, Currency Reforms Vital For Economic Revival – VP Shettima
Another Premium Under-Bridge Apartment Uncovered In Lagos
Sahara’s Tonye Cole resigns from GPHCDA
Niger Delta Avengers: President Buhari Reads riot Act …considers the carrot and stick option
Adeosun: We are investing in infrastructure to grow the private sector
Oando opens ultra-modern petrol station in Lagos
Shell launches Nigeria campaign on energy efficiency
