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Budget 2017 : China may withhold $29.9b loans

Written by Maritime First
  •  As Nigeria saves N15.4bn monthly, from fuel subsidy

China may withhold part of the $29.9 billion loans on which Nigeria partly pins its hope of financing next year’s N7.298 trillion budget.

The Chinese government is said to be upset by the Federal Government’s diplomatic recognition of Taiwan as a sovereign nation.

The “cold war” over Taiwan may also affect the implementation of the $80billion MoU between the Nigerian National Petroleum Corporation (NNPC) and China.

The Nation learnt that the Chinese Government raised the matter when President Muhammadu Buhari visited Beijing. He assured his hosts that the status of Taiwan Marketing Mission will be downgraded, nothing has been done, a source said yesterday.

Taiwan and its associated territories are regarded as a province of China.

But the Chinese government got intelligence report that Taiwan Marketing Mission had been operating as a full-fledged mission since the days of former President Goodluck Jonathan.

All efforts to reverse the status were said to have fallen on deaf ears.

Nigeria is seeking $29.9billion loans to augment its plans to finance its budget which was presented to the National Assembly on Wednesday by the President.

Of the $29.9billion loans, the Federal Government’s share is $25.8billion. The states will have a $4.1billion facility.

The details of the loans are as follows:

  • The external borrowing plan is a three- year plan covering proposed projects for 2016 – 2018. As such, the borrowings will be phased over the three year period.
  • The borrowings are highly concessional (non-commercial), with low interest rates and long tenors.
  • The funding is being sought from multilateral institutions, including the World Bank, Africa Development Bank (AfDB), Islamic Development Bank (IDB), Japan International Co-operation Agency (JICA) and China EximBank.
  • The planned Eurobond issuance in the international capital markets is the only commercial source of funding.

But the expected components from China EximBank may not come until the diplomatic status of Taiwan Marketing Mission is “well-defined”, the source said.

The source, who pleaded not to be named because of “the sensitive nature of the matter”, said: “The Chinese government is now a bit reluctant to grant loans to Nigeria through its EximBank because of the issue of distrust between the two nations over Taiwan.

“The Chinese government is unhappy with the Federal Government that it is operating a two-China diplomatic policy. The government relates with China and Taiwan on equal basis.

In the meantime, Vice-President Yemi Osinbajo says the fuel subsidy removal has removed a burden of not less than N15.4 billion monthly from the Federal Government. Osinbajo said this in Abuja on Thursday at the 2016 presentation of Scorecard of the Ministry of a Petroleum Resources and Agreements Signing ceremony for Joint Venture Cash Calls (JVC) exit.

Represented by the Attorney-General of the Federation and Minister of Justice, Mr Abubakar Malami, Osinbajo said that $15 billion would be injected into the sector. ”I am pleased to be the special guest of honour at the agreements signing ceremony for Joint Venture Cash Call exit and the announcement of $15 billion investments to be done in the sector.

”The oil and gas sector remains very critical to the stability and growth of our economy as it accounts for about 90 per cent of earnings. ”Amongst others, the downstream sector has been deregulated with the elimination of petroleum subsidy. ”This policy has removed from government, a burden of not less than N15.4 billion monthly,” he said.

The vice-president said that government had taken steps to raise the domestic refining capacity for petroleum products by repairing the existing refineries. ”We have also licensed modular refineries and support the development of private refineries one of which is a 650,000 barrel per day capacity,’’ he said.

According to him, one of the refineries is nearing completion, adding that when completed, it will restore ‘’our pipeline to facilitate crude and products transportation.” He said that the Federal Executive Council (FEC) had approved new measures aimed at eliminating the burden of JVC and easing future payments in the upstream sector.

Osinbajo commended the World Bank on the global initiative to secure the environment by ending and commercialising gas flares. ”It will boost the discharge of international obligations by Nigeria on climate change and contribute to our national power generation capacity”.

He urged other ministries to come up with score cards of their performances in the last year.

Also speaking, the Minister of State for Petroleum, Dr Ibe Kachikwu, said that when he took over the leadership of the ministry, oil sector was losing N1.2 trillion every year and fuel scarcity was common. ”Today, we have a situation where refined petroleum consumption has gone down from an all-time high of 40 million litres a day to about 28 million litres a day.

”On cash call, the issue was how long the upstream was going to continue to bleed as investments were drying up and activities grinding to a halt. ”For the first time in 2017, you are going to see the Ministry driving an effort with the Department of Petroleum Resources to find leakage areas, essential to cover the gap in the 2017 budget.

”In the Niger Delta, we have brought the all-time low production of 1.3 million barrels per day (mbpd) to 1.8mbpd but for some minor incidents it would be closer to 2.1mbpd or 2.2mbpd. ”We set a zero militancy target in 2017 and we want anything that needs to be done should be done,’’ he said. On Organisation of Petroleum Exporting Countries (OPEC), he said that he was thrust into the chairmanship of the organisation immediately he was appointed.

He added that he said he had to convince four countries to serve as engine rooms of finding solutions and not bringing the national problems to OPEC. In her address of welcome, Dr Jamila Shua’ra, said that ”the year started with refineries producing below capacity, high demand for petroleum products and insufficient supplies at depots, forex shortages.

”However, President Muhammadu Buhari believed in our team and our collective ability to find     solutions. ”Although, it is not Uhuru yet, there are many more rivers to cross. As we speak, aviation fuel remains a challenge. ”We are yet to pick maximum capacity in our refineries and there is need for more investors to fund massive infrastructural development in the sector”.

Awards were presented to an outstanding staff each from subsidiaries of the Ministry.

Nation with additional report from The Citizen

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Maritime First