China Eximbank provides $500 million preferential buyer’s credit for Phase 1 (Abuja-Kaduna Section) of Nigerian Railway Modernization Project (Linked to Record ID#1844, #60848, #60767, #60850)

Project narrative

On December 20, 2010, China Eximbank and the Government of Nigeria signed a $500 million preferential buyer’s credit (PBC) agreement for Phase 1 (Abuja-Kaduna Section) of the Nigerian Railway Modernization Project. The PBC (loan) carried the following borrowing terms: a 20 year maturity, a 7 year grace period, and a 2.5% interest rate. The final maturity date of the loan is September 21, 2030. China Eximbank required that the borrower open two bank accounts: an escrow (revenue) account and a sinking fund (debt service reserve) account. The borrower and Nigeria Railway Corporation (NRC) were required to (a) deposit all railway (project) revenues deposited in an escrow account and (b) maintain a minimum cash balance in a sinking fund (debt service reserve) account. As of December 31, 2020, Nigeria’s Debt Management Office (DMO) reported that the China Eximbank PBC (loan) had achieved a 100% disbursement rate ($500 million) and the borrower had made interest repayments worth $79.68 million and principal repayments worth $115.38 million to the lender. As such, the loan’s (principal) amount outstanding, as of December 31, 2020, was $384.62 million. As of 2021, the cash balance of the escrow (revenue) account was NGN 420.46 million ($1,044,002.18). Phase 1 of the project involved the modernization of a 186.5 km railway section from Abuja (Idu), the country’s federal capital, to Kaduna, the country’s commercial capital. The railway section is part of a larger 1,313 km standard gauge railway that runs from Lagos to Kano and carries both passenger and cargo. China Civil and Engineering Construction Company (CCECC) was the contractor responsible for implementation. CCECC signed an EPC contract with the Government of Nigeria on October 26, 2009. Construction began on February 20, 2011. Then, on July 4, 2013, a track-laying ceremony took place. The construction of the railway was completed in December 2014. The railway officially began commercial operations on July 28, 2016. In 2020, Pew Research Center released an analysis of this project. It found that, during the railway’s construction period, Nigerians living near the railway were less likely than those farther away to express a favorable view of China. However, approval of China among those nearby rebounded to levels more in line with other Nigerians after the railway’s completion.