The federal government has confirmed the sovereignty clause in Nigeria’s loan agreement with China which has been described as “dangerous” by the House of Representatives.
Speaking at the investigative hearing on external loans and commercial agreements which was attended by 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, Chairman of the House Committee on Treaties, Protocols and Agreements, Nicholas Ossai disclosed that Nigeria’s loan agreement with China is governed by Chinese laws.
Ossai who noted that the Federal Government signed an Executive Order in 2014 providing guidelines on waiver of sovereign immunity during the loan and commercial agreement negotiations, accused Nigerian officials of violating the order.
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 the national interest. 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 the loan and commercial agreement negotiations. 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.”.