Buhari’s government finally confirms sovereignty clause exists in loan agreement with China; lawmakers says loan agreement dangerous

National House of Representatives

The Federal Government has confirmed a sovereignty clause in the Nigeria loan agreement with China.

Nicholas Ossai, the Chairman of the House Committee on Treaties, Protocols and Agreements, had asked the Minister of Transportation, Rotimi Chibuike Amaechi, about the clause-waiving immunity in the contract agreements, Amaechi told the lawmaker to direct the question to the Ministry of Finance.

The minister had previously denied the existence of such dangerous clause, saying that there was no such thing and our sovereignty was not at risk.

Responding however to the question of the lawmaker, the Permanent Secretary of the Finance Ministry who represented the Finance Minister, said that the waiver of sovereign immunity was now standard practice in international commercial agreements worldwide.

“Regarding the waiver of sovereign immunity, if you check most of the international commercial agreements these days, it is a standard clause in a number of international financial loans and commercial agreements worldwide.”

Speaking further on the document Ossai showed him, the permanent secretary said; “I am aware. This is an arm of the World Bank, the International Centre for Settlement of Investment Disputes. This is in the event that you have an investment dispute with any of the contracting parties. You can go to arbitration.”

The permanent secretary also noted that the judgement would be enforceable in Nigeria.

In his reaction, the Chairman of the Committee said; “that means that the particular clause is dangerous. Now, you have a circular, agreed by the Federal Government to guide you in signing agreements. You disobeyed that circular issued by the President of the Federal Republic of Nigeria to guide you. But you were desperate enough to go and sign and waive the immunity clause of Nigeria. And you come on the pages of newspapers and tell Nigerians that, that is a standard. That is not a standard.”

Amaechi defends sovereignty clause; says Nigerians happy with projects

In his attempt to defend the dangerous agreement, the Transport Minister said; “Why I am shaking my head is that if we listened to him (the PS) carefully – and we had that debate which included people like Femi Falana, Bolaji Akinyemi and others – that these are standard clauses which, if you don’t add them, you cannot have a loan.

“I will like to call the attention of the National Assembly to the fact that we have never refused to pay our loans. If we don’t take these loans to develop Nigeria…when I got to Lagos on Saturday to inspect Lagos-Ibadan (rail), the number of people jubilating may not like me; they may not care about me if I walked on the streets but they were jubilating because of the fact that they can take transport from Lagos to Ibadan,” Amaechi added.

The lawmaker however insists that the agreement was dangerous, adding that the agreement were governed by Chinese laws and not Nigeria’s. He further revealed that the Permanent Secretary did not know what his people signed.

Ossai noted that the former President Goodluck Jonathan’s administration had signed an Executive Order providing guidelines on waiver of sovereign immunity during loan and commercial agreement negotiations, but Nigerian officials had been violating the order.

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; 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.

Naija Buzz News had reported that Ossai noted that the clauses and agreements had been existing before the Muhammadu Buhari administration, adding that the probe was not about the All Progressives Congress (APC) or the Peoples Democratic Party (PDP).

“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 chairman of the committee said.

“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 added.

Ossai noted that it was common practice for most international loan agreements to adopt sovereign guarantee and a neutral international arbitration centre, “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.”

“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.”

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

He revealed that they negotiate the terms of the loans before coming back to the President, who would then ask the National Assembly for approval for billions of dollars to execute the projects, without attaching the negotiated loan and commercial contract agreements details.

“This approach is the reason we have government representatives signing empty pages of loan agreement repayment schedule and other key documents required for the loan agreements to become effective.

“We have commercial contracts signed in US dollars, while the loan agreements for the execution of the same contracts were signed in Chinese Yuan currency in the Ministry of Communications and Digital Economy/Galaxy Backbone Limited.”

Ossai also noted that the committee noticed from documents that commercial contracts prices signed by the Federal Ministry of Transportation alone were over $33billion “without any clear cut financing arrangements.”

“Most of these commercial contract agreements didn’t also have local content clauses and were witnessed by non-properly designated and authorised officials.”

Amaechi however faulted the committee chairman’s statement, telling him to be more patriotic.

“In slight response to your speech earlier, I will repeat here that we need to be more patriotic than we are being.”

As the chairman attempted to interrupt him, Amaechi said; “Mr Chairman, I have the right to speak. You invited me, I was once a member of the House (of Assembly in Rivers State). If you say Ministry of Transportation has a contract $33bn, we want to see it, because as the Minister of Transportation, the only contract awarded so far is $1.6bn contract for Lagos-Ibadan, which is under threat.”

“Mr Chairman, the implication of having a contract of $33bn is that I will have a large number of workers. There is no $33bn contract in Ministry of Transportation. What we have is the $1.6bn contract awarded under President Buhari and the $800m contract awarded by Goodluck Jonathan.”

“There are over 20,000 workers and only 560 of them are Chinese. We need to begin to say the truth. It is good to tell Nigerians the truth. This is very political and we will show all the contracts awarded by the PDP government.”



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