By 4 Minutes Read* Chinese infrastructure lending in Africa has decreased* NNPC says it still wants funds from Chinese lenders* Chinese lenders are concerned about their exposure to Nigeria, according to a source. LAGOS, July 16 (Reuters) – Nigerian President Muhammadu Buhari has vowed to fight corruption in the country. Nigeria is seeking $1 billion to continue work on a $2.8 billion gas pipeline after Chinese financiers who had agreed to provide the majority of the funding did not deliver cash as quickly as expected, according to three persons familiar with the situation. After years of large Chinese loans for railway, energy, and other projects, this is the latest indicator of declining Chinese financial backing for infrastructure projects across Africa. A spokeswoman for the Nigerian National Petroleum Corporation (NNPC), which is developing the 614-kilometer (384-mile) Ajaokuta-Kaduna-Kano (AKK) pipeline, said the corporation was still in talks with Chinese lenders Bank of China and Sinosure to cover the project’s $1.8 billion cost. “There’s no need to be concerned,” the official added, declining to specify whether NNPC was looking for other lenders. The corporation, according to the three sources, is now approaching others, including export-import institutions, to continue work on the pipeline, which will run through the centre of the West African country to Kano, its northern commercial hub. The project, which is important to President Muhammadu Buhari’s strategy to develop gas resources and aid development in northern Nigeria, had previously been lined up with Chinese lenders to cover the majority of the projected $2.5 billion to $2.8 billion cost. The NNPC, which was sponsoring 15% of the project, announced last year that it had begun work with its own funds. According to the sources, the Chinese lenders refused to deliver the funds NNPC had expected by the end of the summer, forcing the company to look for other options. “They’re looking at Nigeria as a single loan,” one insider said. “Right now, they feel they’re too exposed.” The Bank of China has stated that it will not comment on specific transactions. A request for comment from Sinosure was not returned. Requests for comment from the Nigerian ministries of transport, finance, and petroleum were similarly ignored. According to a Baker McKenzie analysis released in April, Chinese bank lending to African infrastructure projects has decreased from $11 billion in 2017 to $3.3 billion in 2020. With an estimated yearly infrastructure investment deficit of $100 billion on the continent, the loss of Chinese assistance leaves a significant hole to fill. Nigeria said the AKK pipeline will help create 3.6 gigawatts of power and serve gas-based sectors along the route when it started construction in June 2020. The project was to be financed using a debt-equity strategy, with a sovereign guarantee and repayment through the pipeline transmission tariff. Oando, OilServe, China First Highway Engineering Company, Brentex Petroleum Services, and China Petroleum Pipeline Bureau were granted engineering and construction work along three sections of the pipeline by the NNPC. Following media allegations that Nigeria was planning to rely heavily on Chinese banks to pay railway projects, Transportation Minister Rotimi Amaechi announced this month that the country was negotiating a combination of loans from Chinese and European lenders to fund the projects. Camillu Eboh in Abuja and Cheng Leng in Beijing contributed additional reporting; Veronica Brown and Edmund Blair edited the piece./n
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