Reps Fault Chinese Loan Terms, as FG Confirms Sovereignty Clause

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Reps Fault Chinese Loan Terms, as FG Confirms Sovereignty Clause
Nwolu Obiajulu

The House of Representatives has frowned at the sovereignty clause in Nigeria’s loan agreement with China, describing it as dangerous.

Nicholas Ossai, Chairman of the House Committee on Treaties, Protocols and Agreements stated this at the investigative hearing on external loans and commercial agreements, saying Nigeria’s loan agreement with China was overseen by Chinese laws.

He said Nigerian officials have been going against the Executive Order providing guidelines on waiver of sovereign immunity during loan and commercial agreement negotiations which the Federal Government signed in 2014.

Ossai in his remarks, noted that the controversial clauses and agreements preceded the President Muhammadu Buhari’s administration. He also said that the inquiry was not about the All Progressive Congress (APC)or the Peoples Democratic Party (PDP)

He equally stated that the probe was not limited to Chinese loans and commercial contracts. Ossai said, “We will like Nigerians to know that we are not focusing on only Chinese loans. From what we know, Nigeria has over 500 bilateral loan/commercial contract agreements and investment treaties with different countries and institutions. There is no way the committee will do a thorough job without segmenting the issues based on countries, institutions or MDAs.

“The loan agreements we have seen so far show that government  officials charged with the responsibility of representing Nigeria in these issues are more desperate to just take the loans at any condition, possibly using non-negotiated loan agreement templates rather than go through the rigour of diligent technical review of negotiating specific clauses with clarity and for national interest.”

He said it was a common practice that most international loan agreements would adopt ‘sovereign guarantee’ and a neutral international arbitration centre.

The committee chairman said, “Even in situations where countries, out of desperation and weak economic position, waive their national sovereignty in bilateral or contractual agreements, the immunity of sovereignty waiver clause will usually be clear and categorically state specific assets associated with the loans for takeover in the event of default.

“However, the immunity clauses in most of these agreements before us are not only ambiguous, but also very obscure and without recourse to the fact that the Nigerian government had issued a circular on the subject matter with Reference Number SGF/OP/1/S.3/X/1739, dated 11th August, 2014, which is an Executive Order, that provides guidelines on issues of waiver of sovereign immunity clause during loan and commercial agreement negotiations.”

Ossai further stated that arbitration centres for bilateral loan agreements are known to be generally in neutral places, “unlike what we have in most of the Nigeria/China agreements where Hong Kong that is also governed by China laws was designated as the arbitration centre.”

He noted that government agencies sign commercial agreements in billions of dollars before going to the Federal Executive Council for approval to execute them.

Ossai stated that they proceeded to negotiate the terms of the loans before coming back to the President, who would be asking the National Assembly for approval for billions of dollars to do projects without attaching the negotiated loan and commercial contract agreements details.

Members of the executive, who appeared before the committee were the Minister of Transportation, Rotimi Amaechi; Minister of Works and Housing, Babatunde Fashola; Minister of Communications and Digital Economy, Ali Pantami; Minister of Police Affairs, Muhammad Maigari; and Minister of the Federal Capital Territory, Mohammed Bello.

Others included the Director-General, Debt Management Office, Patience Oniha; Permanent Secretary (Special Duties in the Ministry of Finance), Aliyu Ahmed and Director, Legal Services, Gabriel Christopher, both representing the Ministry of Finance, Budget and National Planning.

Source: Punch

This post was written by Nwolu Obiajulu.

The views expressed here belong to the author and do not necessarily reflect our views and opinions.

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