Federal Government has revealed that it needs a total of $36 billion to complete rail projects across the country. Minister of transportation, Rotimi Amaechi stated this on Thursday when he appeared before the Senate Committee on Local and Foreign Debts over government’s bid to borrow $5.5 billion foreign loan.
The minister disclosed that President Muhammadu Buhari had directed that the rail line project be extended to cover all 36 state capitals.
“If you put it all together, the total cost of the entire rail projects will amount to about $36 billion. Actually we don’t have the money. But it’s an ambitious plan. We really have to start something somewhere and see how far we go,” he told the Shehu Sani-led panel.
Amaechi informed the committee that part of the $5.5 billion loan being sought was to fund the Itakpe to Warri, Kano to Kaduna and Port Harcourt to Calabar aspects of the rail projects.
Buhari had in a letter to the National Assembly requested approval for $5.5 billion foreign loan, as part of the 2016-2018 External Borrowing Plan meant to finance capital projects in the 2017 budget and refinance maturing domestic debts.
He stated that while $2.5 billion was to finance capital projects in this year’s appropriation act, $3 billion would be used to refinance maturing domestic debts.
The President listed the capital projects, which the proceeds of the $2.5 billion loan would be used to fund to include: Mambilla Hydropower project, construction of a second runway at Nnamdi Azikiwe International Airport, counterpart funding for rail projects as well as construction of Bodo-Bonny Road, with a bridge across the Opobo Channel.
The Senate committee had raised queries regarding the impact of the planned borrowing of $5.5 billion on the living standards of Nigerians.
“Some of the questions Nigerians and indeed our constituents have asked repeatedly include: what has the Federal Government done with the reported recovered loot allegedly traced to the previous administration? What role can such recovered monies play in the 2017 budget financing? How much indeed has been recovered? Has the National Assembly appropriated the recovered loot for government expenditure?” Sani asked.
He said that all actions and decisions with respect to this loan request by his Committee and indeed this Senate would be done on its merits.
On her part, finance minister, Kemi Adeosun, told the Committee that the $2.5 billion part of the loan has already been approved in the 2017 budget.
Represented by the director-general of the Debt Management Office, Patience Oniha, she further explained that the $3 billion part is to upset local debt, adding that it is not healthy to have such huge local debts hanging on the country.
“Borrowing at 7 percent interest rate in the international market is cheaper than borrowing at 17 percent interest rate in the local market,” Adeosun noted. Wondering why the Federal Government could not resort to local resources in servicing the local loans, the committee declared that it was important Nigerians were told how the projects the loans were to be used for, which would help in servicing and paying the debts.