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ABUJA, Sept 12 (Reuters) - Nigeria has signed a deal to
borrow $600 million from China's Export-Import Bank, most of
which will be used to build a railway servicing the capital
Abuja and surrounding areas, the finance ministry said on
Wednesday.
The loan was agreed at 2.5 percent over a period of 20
years, with a grace period of seven years, the ministry said.
China has made a string of cheap loans in the past few years
with countries in Africa, a continent which supplies oil and raw
materials like copper and uranium to the world's most populous
country and second-largest economy.
Lending at below market rates to fund infrastructure
projects using Chinese firms has been a common Chinese tactic
for cementing its relationship with resource-rich Africa, whilst
also subsidising its construction industry.
The Abuja railway, which is being built by the state-owned
China Civil Engineering Construction Corp, will cost $500
million and is due to be completed by 2015, although like many
projects in Nigeria it is running behind schedule.
A further $100 million of debt will be used for Nigeria's
Galaxy Backbone project, which is aimed at improving security
and giving young people better access to technology.
One strand of the new railway will link Abuja city centre
with the international airport and the other plans to connect
surrounding commuter regions with the capital. Roads around the
capital are poorly maintained, congested and dangerous.
"The light rail in Abuja will improve transportation for all
residents, especially the working class," Nigerian Finance
Minister Ngozi Okonjo-Iweala said at the signing agreement with
China Exim bank in Beijing.
Nigeria expects in the next few weeks to sign off on another
deal with China to borrow a further $500 million to build four
airport terminals in Abuja, Kano, Port Harcourt and Enugu, the
finance ministry said.
(Reporting by Joe Brock; Editing by Tim Cocks, Ron Askew)