China offers Nigeria $1.1B loan for rail, airports

ABUJA, Nigeria – China is offering Nigeria $1.1 billion in loans to help the West African nation build airport terminals, a light rail line for its capital city and communication system improvements, the country's Finance Ministry said Wednesday.

The loans reflect the deepening economic ties between oil-rich Nigeria and China, which already is involved in building major road and railway projects in the nation. However, similar deals with China have fallen apart amid corruption allegations, problems that persist today and could potentially put this new deal at risk as well.

The light rail project for Abuja, the nation's central capital, would bring commuters in from suburbs surrounding the city's distant international airport and from neighboring Nasarawa state, the finance ministry said. That project would cost about $500 million, the ministry said. Another project, valued at $100 million, part of a loan deal already signed involving the light rail, would go toward improving Nigeria's Internet capability, the ministry said.

The 20-year, 2.5 percent interest loan for those two projects has a grace period of seven years before payment is required, the ministry said.

Separately, another $500 million loan will go toward building airport terminals in Abuja, Enugu, Kano and Port Harcourt, the statement read. Airports in Nigeria, Africa's most populous nation with more than 160 million people, largely sit in disrepair as most were built in the 1960s and 1970s.

Chinese diplomatic officials in Nigeria could not be immediately reached for comment Wednesday.

The loans come as China increasingly looks across Africa for raw minerals and supplies to fuel a massive economy that has slowed in recent years during the economic downturn. Addax Petroleum, a subsidiary of Chinese state-owned oil producer Sinopec Group, already pumps crude oil from Nigeria, although it is a relatively small amount compared to other Western companies operating there. China also has been mentioned as a possible bidder for oil blocks in the country, though experts believe past Nigerian governments only have used the Chinese interest to force Western firms to increase their own bids.

Recently, Chinese workers helped reconstruct parts of Nigeria's moribund railroad system and have built roads and other projects in the country. But other projects haven't fared as well. In 2006, then-President Olusegun Obasanjo signed an $8 billion deal with the Chinese to repair his nation's railroads, with no visible effect.