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Kaduna-Kano Railway Project is now to Be Sponsored By CDB

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The Senate announced that the Kaduna-Kano railway modernization project financing will be taken over by CDB (China Development Bank).

Following the backing off of China Exim Bank from financing the largest Nigerian railway modernization project, the Senate announced on Tuesday that China Development Bank will take over the financing.

It was disclosed on Tuesday that the Nigerian Senate approved the CDB (China Development Bank) will become the new financier of the Kaduna-Kano railway project through a motion sponsored by Senator Sadiq Umar (APC-Kwara).

According to the senator, the National Assembly approved a $22.8 billion loan to be used in modernizing the Kaduna-Kano railway project back in 2020.

More Details to the News

The Senate revealed that since the former financier, the China Exim Bank backed off from the project, the CDB took over.

That is; after it coordinated the 2016 to 2018 Federal Government’s foreign borrowing plan for the project.

According to the Senate, the National Assembly endorsed the loan under the 2016 to 2018 Medium Term External Borrowing (Rolling) plan. They cited that the Federal Ministry of Finance asked for approval for the adjustment of the Nigerian Railway Modernization Project in Kaduna and Kano.

Reasons for China Exim Bank’s Backoff

According to Ahmad Lawan, the Senate President, this issue began in 2018 and they got approval in 2020.

However, due to the COVID-19 pandemic, the China Exim Bank has no option but to withdraw its financing support for the railway project. To still salvage the railway project funds, the CCEC (Chinese Construction Engineering Company) Nigeria Ltd. who is the contractor of the project liaised with the Federal Ministry of Transportation to hire CDB to become the new financier at $973.5 million.

The Senate President goes on to say that they are now deliberating on approving the loan. “After all, the former financier backed off and at present, there is a new financier,” he says.

READ ALSO: Federal Government Finally Commence Payment from $350M Cabotage Vessel Financing Fund

Gaps between the Financing

A disclosure by Senator Jibrin Isa showed that a wide gap exists between the former $22.7 billion and the present $973.5 million financing loan.

He wonders if there has already been a disbursement of funds from the former $22.7 billion budgeted. According to him, the Senate needs to be cautious about the basic structures of these loans.

Senator Clifford Ordia (PDP-Edo Central), the Senate Committee on Local and Foreign Debts Chairman clarified the loan details. He stated that;

  • “The submission of the $22.7 billion was for 5 projects under the 2016 to 2018 foreign borrowing plan”.
  • “Coincidentally, few of the projects were endorsed excluding the Kaduna-Kano segment”.
  • “The financier refused to finance the project. As a result, the CCEC Nigeria Ltd. With the Federal Ministry of Transport was forced to engage another financier for the railway segment.

Last year, the Federal Government said that their main focus is to make sure that the Kaduna-Kano standard gauge rail project is completed successfully.

This news was disclosed by Mr. Mu’azu Sambo, the Minister of Transportation at the time of the Yako, Madobi Local Government Area rail project inspection in Kano.

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