- Chinese infrastructure loans across Africa have plummeted
- NNPC says it is still seeking funds from Chinese lenders
- Chinese lenders feel too exposed in Nigeria, source says
LAGOS, July 16 (Reuters) – Nigeria is seeking $ 1 billion to continue work on a gas pipeline costing up to $ 2.8 billion after Chinese lenders who had pledged to offer most of the funds failed have not disbursed money as quickly as expected in the said case.
It is the latest sign of declining Chinese financial support for infrastructure projects across Africa, after years of large Chinese loans for rail, energy and other projects.
A spokesperson for state-owned oil company NNPC, which is building the 614-km (384-mile) Ajaokuta-Kaduna-Kano (AKK) pipeline, said he is still negotiating with Chinese lenders – Bank of China and Sinosure – to cover $ 1.8 billion. the cost of the project.
“There is no reason to be alarmed,” the spokesperson said, without saying whether the NNPC was looking to other lenders.
But all three sources told Reuters the company is now approaching others, including import-export institutions, to continue work on the pipeline that will run through the center of the West African country to its economic center north of Kano.
Chinese lenders were initially aligned to finance most of the estimated $ 2.5-2.8 billion cost of the project, which is at the heart of President Muhammadu Buhari’s plan to expand gas resources and boost development in the northern Nigeria.
The NNPC, which was funding 15%, said last year it used its own funds to start construction. The sources said Chinese lenders would not agree to disburse the money the NNPC was expecting by the end of the summer, prompting it to look to others.
“They see Nigeria as one loan, and right now they think they are too exposed,” a source said.
The Bank of China has said it will not comment on specific agreements. Sinosure did not respond to a request for comment.
Nigeria’s ministries of transport, finance and petroleum also did not respond to requests for comment.
Chinese bank loans to African infrastructure projects have plummeted across the continent, from $ 11 billion in 2017 to $ 3.3 billion in 2020, according to a Baker McKenzie report in April.
With the continent facing an annual infrastructure investment gap estimated at $ 100 billion, the loss of Chinese funding leaves a great void to fill.
Nigeria started building the AKK gas pipeline in June 2020, saying it will help generate 3.6 gigawatts of electricity and support gas industries along the route. The project was to be financed through a debt financing model, backed by a sovereign guarantee and repaid through the pipeline transport tariff.
NNPC awarded engineering and construction work along three sections of the pipeline to Oando, OilServe, China First Highway Engineering Company, Brentex Petroleum Services and China Petroleum Pipeline Bureau.
Transport Minister Rotimi Amaechi said this month that Nigeria was negotiating a mix of loans from Chinese and European lenders to fund rail projects, after media said it initially planned to rely primarily on on Chinese banks.
Additional reporting by Camillu Eboh in Abuja and Cheng Leng in Beijing; Editing by Veronica Brown and Edmund Blair
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