Home News Chinese firms handling $47bn key FG’s projects

Chinese firms handling $47bn key FG’s projects

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At least 22 major infrastructural projects worth over $47bn have been linked to Chinese firms as China continues to support its companies to win prime contracts in Nigeria to maintain a foothold on the nation’s economy.

The projects cut across vital sectors of the nation’s economy such as power, rail, road, aviation and communications.

Investigations by The PUNCH showed that Chinese construction corporations had not only found favour with the Federal Government to execute its critical projects, a number of state governments’ major contracts had gone to companies from the Asian country.

China Civil Engineering Construction Corporation, a subsidiary of the state-owned China Railway Construction Corporation, has won many of the contracts linked with Nigerian projects since 1995, edging out interested companies from the United States and European nations.

The CCECC is involved in multiple projects across the country, comprising the construction of airport terminals, roads and rails including inner-city light rails in Abuja and Lagos, all financed with concessional loans from the Exim Bank of China.

$600m for four international airport terminals

In aviation, the Federal Government entered into a partnership with the Chinese government through the CCECC in 2013 to execute four international airport terminal projects.

The projects are the rehabilitation and construction of airport terminals in Nnamdi Azikiwe International Airport, Abuja, Port Harcourt International Airport, Mallam Aminu Kano International Airport, Kano and the Murtala Muhammed International Airport in Lagos.

The four projects are being funded with a $500m loan from the Export-Import Bank of China and $100m counterpart funding from the Federal Government, obtained as a loan from the Debt Management Office at an interest rate of 5.37 per cent.

Railways to gulp $35bn

In the railway sub-sector, the CCECC was handed a $528m contract in 1995 to rejuvenate the nation’s stretch of old rail track, supply 50 locomotives, wagons and coaches, install signal system and train Nigerian workers.

The contract, which had four-year delivery period, was executed partially and later abandoned after fund commitment and was never revisited.

Despite abandoning the $528m project, the CCECC has continued to win railway contracts from both the federal and state governments.

For instance, it has its hands in all the three major rail lines being built across the country. They are Lagos-Kano (with another line from Kaduna to Abuja), Lagos-Calabar rail and Port Harcourt-Maiduguri rail, whose costs are put at $9bn, $11bn and $15bn, respectively.

When the idea of a 25-year railway development plan was mooted in 2006, the Chinese firm got the first contract to build a new line between Lagos and Kano at a cost of $8.3bn.

After the foundations laying ceremony at Kajola, Ogun State, performed by the then President Olusegun Obasanjo, nothing was heard about the project again.

About 10 years later (2016), the same firm was beckoned to handle the project after its review by the Muhammadu Buhari administration.

It started with the phase one of 156km Lagos-Ibadan stretch awarded at $1.5bn. Additional $500m was approved by the FG, according to the Minister of Transportation, Rotimi Amaechi, for the procurement of locomotives and other rolling stocks for the new line.

The company later won the $6.68bn contract for the Ibadan-Kaduna stretch, which consists of four segments and the project could take two to three years to complete, depending on budget, according to the minister.

The CCECC also handled the construction of the Abuja–Kaduna segment costing $876m, consisting of $500m in loans from the Exim Bank of China and the balance coming from the Nigerian government.

The 187km rail contract was awarded in 2009. The new line, Nigeria’s first high speed rail, was inaugurated in July 2016 by President Buhari.

The FG has also signed two contracts valued at $5.1bn with the Chinese firm for the construction of the new rail lines.

They are the Kano-Kaduna rail, which is the Segment 3 of the Lagos-Kano rail modernisation project with a contract sum of $1.68bn; and the Calabar-Port Harcourt Segment 1, which extends to Onne Deep Seaport of the coastal rail project at a cost of $3.4bn.

The coastal rail is part of the Lagos-Calabar line signed with the CCECC in 2016 worth $11bn.

In September 2016, the China Railway Construction Corporation announced that it had won a $1.8bn contract to construct the Kano city light rail with a total length of 74.3km.

The Chinese firm handled the rehabilitation and asphalt overlay of the Papalanto-Lagos/Ibadan Expressway valued at $4,780,000m, which was completed in May 2001.

Dr Adaora Osondu-Oti of the Afe Babalola University, Ado-Ekiti, in his survey of Chinese projects in Nigeria listed the construction of houses in the Games Village of the National Stadium Complex, Abuja valued at $50.5m and commission building in Abuja valued at $16.56m.

She also listed the rehabilitation of Ikot Akpaden-Okoroette road awarded by the Niger Delta Development Commission and valued at $5.63m and the construction/rehabilitation of Ugep, Ikom, Ogoja and Obudu Urban road valued at $14.6m.

In the communications industry, there are two major projects linked with the Chinese firms worth $670m.

One of them is the National Rural Telephony Programme, designed by the Federal Government to extend telecommunication services to rural communities.

The project was financed through a $200m concessionary loan from China and awarded to Chinese companies – Alcatel and ZTE Nigeria Limited – in the first phase.

Another project, the $470m Close Circuit Television contract was awarded to the ZTE during former President Goodluck Jonathan’s tenure. The contractor was said to have stopped work after collecting the sum of $100m.

The communications system awarded to ZTE Nigeria Limited is meant to provide audio, video and data information for use by the Nigeria Police Force and other security agencies.

The contract for the installation of the CCTV cameras in Abuja and Lagos by the Ministry of Police Affairs was part of a larger project titled, ‘Nigerian National Public Security Communications System,’ facilitated by an EXIM Bank of China loan.

Another project in the communications sector was Nigeria’s first communications satellite, NigComSat-1, which was designed and built by the China Great Wall Industry Corporation at a cost of $400m.

The satellite which was put in the orbit in May 2007 was deorbited in November 2008 following the development of power fault. It was replaced in December 2011 with NigComSat-1R by the same company.

Three power projects worth $10bn underway

Chinese firms are involved in three key projects in Nigeria’s power sector estimated at $10bn. One of the projects, the Mambilla hydroelectric power plant, is for the delivery of a 3,050Megawatt power plant in Taraba State.

The $5.8bn contract was signed by the FG and the China Gezhouba Group Corporation, Sinohydro Corporation Limited and the CGCOC Group Company Limited in November 2017, about 40 years after the idea was conceived.

The China Exim Bank and other Chinese lenders will provide 85 per cent of the contract sum, while Nigeria pay the 15 per cent balance.

Zungeru hydropower project is a 700MW hydroelectric facility also being developed with the Chinese assistance on the upper and middle reaches of Kaduna River in Niger State.

A consortium of China National Electric Engineering Company and Sinohydro was awarded the $1.3bn contract in October 2012. It is expected to take 60 months for completion. The company’s Deputy Project Manager, Mr Xiao Nie, said the project would be completed in 2020.

Another power project with funding support from China is the $1bn Gurara hydropower plant located in Kaduna. It has the capacity to generate 360MW electricity.

Attraction of China: Low price, low-interest loans

Data from the Debt Management Office show that Chinese credit accounts for 80 per cent of all bilateral loans to Nigeria.

Many analysts attributed the seeming attachment of Nigeria and other African countries to China and its corporations in key project developments to China’s cheap labour, low price and favourable funding arrangement.

For instance, apart from the Exim Bank of China bearing the huge chunk of the cost through concessionary loans, they point to the low-interest rate on loans from China’s Exim Bank, usually not above three per cent, as enticing.

A recent loan promise of $328m from China’s Exim Bank led to Nigeria’s Galaxy Backbone and China’s Huawei Technologies signing a deal for the country’s telecoms infrastructure development.

Vice President Yemi Osinbajo, the justifying Nigeria’s preference for China’s concessional loans, said they only attracted between 1.5 per cent and two per cent interest.

He spoke at a recent meeting with strategic investors at the Council for Foreign Relations, New York.

Many analysts noted that relevant indigenous firms and people were hardly employed by these Chinese contractors during the projects’ execution or merely hired casual workers.

The Director General of NECA, Timothy Olawale, said some of the agreements between the Federal Government and the Chinese government were not properly thought out in terms of technology transfer.

“The agreement is not favourable to the skill set of our people. We have engineers who are well qualified, better than those they are bringing in from China but they are out there roaming the streets.

“Granted that it is the Chinese government loan and they have the right to bring in their expertise too but the agreement should have taken into cognizance the development of our youths,” he said.

A former Secretary General, Nigeria Labour Congress, Peter Ozo-Eson, told The PUNCH that in signing the agreements, the Federal Government did not pay attention to requirements for local content.

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