China to offer Nigeria loan of between $3bn and $4bn loan to upgrade oil infrastructure

PETROLEUM minister Dr Ibe Kachikwu has revealed that Nigeria will soon conclude a loan deal with China with between $3bn and $4bn that will be channelled towards the provision of infrastructure in the oil and gas sector.

 

At the moment, Nigeria is struggling to upgrade facilities within the sector as many of the country's oil pipelines are old and in need of replacing. Also, none of Nigeria's three government-owned refineries are working to full capacity and the combination of these two factors has led to fuel scarcity.

 

To address some of these problems, the government has decided to seek a loan to effect urgently-required repairs. Revealing this at the end of the Federal Executive Council meeting held at the presidential villa, Dr Kachikwu said that the loan was a fallout of the July roadshow held by the petroleum ministry and the Nigerian National Petroleum Corporation (NNPC) in China.

 

He also revealed that over 40 Chinese investors would be visiting Nigeria by the end of the month, explaining that the memoranda of understanding (MoU) signed during the roadshow has a gestation period of about one year. Under the terms of the deal, both countries set up their teams on a bilateral basis to look at specific areas of investment interests.

 

Dr Kachikwu added: “Generally, when you have a memorandum of understanding, the gestation period takes over a year, because after you get your MoUs signed you have to set up teams from both countries on a bilateral basis. Then you begin to look specifically at the areas you pledged, what are the business incentives, the terms, and whether to invest.

 

“That is still work in progress but we are having a team of over 40 Chinese investors, members of some of those bodies with which we signed MoUs that will be visiting Nigeria by the end of this month. We are also setting up a full inter-ministerial panel that will be deliberating with them for each of those sectoral investments.

 

He added that he target they had while going to China was to raise $40bn, which is the total cost of Nigeria's infrastructure gap for the oil industry. However, the government had commitments for about $75.6nn, $69bn of which were NNPC and government-related potential investments and loans, with the rest coming directly to the private sector.