The immediate past Minister of Finance, Dr Ngozi Okonjo-Iweala on Sunday described as untrue allegations that a substantial part of the $1bn Chinese loan obtained for railway projects was diverted.
Okonjo-Iweala in a statement issued by her Media Adviser, Mr Paul Nwabuikwu, also explained that contrary to the allegation, the Kano-Lagos rail project is not part of the project listed for funding from the Chinese loan.
President Muhammadu Buhari had last Monday queried the Ministry of Finance over alleged diversion of foreign loans obtained for rail projects by the administration of former President Goodluck Jonathan.
Specifically, the President was seeking clarification on alleged diversion of a substantial part of a $1.005bn loan obtained from the Chinese Exim Bank for the construction of a standard gauge rail line linking Lagos to Kano.
The funds were said to have been moved elsewhere.
But while reacting to the allegation, Okonjo-Iweala who spearheaded the negotiation of the loan during her time as finance minister said the China-EximBank kept and disbursed funds for approved projects to contractors based on milestones.
The funds, she added, were not domiciled with Finance Ministry.
Giving a breakdown of the loan and how it was utilized, the minister said that $500m was used for the expansion of four International Airport Terminals in Lagos, Kano, Abuja and Port Harcourt, $500m for the Abuja Light Rail project, $984m for the Zungeru Hydro-electric power project and $100m for the Galaxy Backbone project
The minister in the statement noted that even if the alleged project was on the list of China-Exim Bank funded projects, diversion of any Chinese funds would have been extremely difficult because the terms of the contract and the processes would simply not have permitted such action.
The statement reads in part, “We have continued to receive media inquiries regarding an allegation reportedly made by the Permanent Secretary, Ministry of Transport, Alhaji Mohammed Bashar, that a substantial part of a $1bn loan obtained from the China-EximBank by the Jonathan administration for a Kano-Lagos rail project was diverted to other projects.
“I want to state categorically that there is no truth in the reported allegation. Anyone who is interested can cross-check with the China-EximBank or the Chinese Embassy.
“It is noteworthy that even though President Buhari, in his reported comments on the allegation, made no reference to Dr. Okonjo-Iweala but rightly stressed the need for due process and transparency in the execution of public projects, a sponsored media campaign has once again been launched by political elements to make the former Minister the culprit in a non-existent scandal.
“The alleged diversion has no substance for the simple reason that the Kano-Lagos project was not even among the projects presented for funding by the China EximBank for several strategic infrastructural projects across the country.
“In fact, it was the Lagos–Ibadan rail project, not Lagos-Kano rail project that was proposed in the original application to the China-EximBank. But in the end, no funds were assigned for the Lagos-Ibadan rail project by the China-EximBank.”
The statement explained that based on the terms of the loan, the procedure was that funds for approved loans remain in the China-EximBank.
The funds, according to her were released directly to the Chinese firm executing the contract only after the presentation of duly certified proof of work by the Federal Ministry of Transport, based on the agreed milestones.
“For the sake of emphasis, the China-EximBank does not disburse money directly to government and therefore the issue of diversion does not arise,” the statement added.