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China Grants $1.1bn Loan to Oil-Rich Nigeria

Nigerian President Goodluck Jonathan (R) gestures to introduce ministers in his cabinet as Chinese President Xi Jinping (L) watches.

China has strengthened its oil trading relationship with Nigeria after it struck a deal to provide a $1.1bn low-interest loan to the African nation for infrastructure development.

As China's demand for energy and commodities ramps up, the deal will certainly strengthen its trade dynamic with the resource-rich continent. Nigerian President Goodluck Jonathan, who is on a four-day trip to China, and his counterpart Xi Jinping signed the agreement during a meeting in Beijing on Wednesday.

Jonathan is leading a business delegation, including 19 top government officials, to China to boost business and economic ties between the two countries.

The loan would help Nigeria to build roads, airport terminals in four cities, and a light-rail line for its capital. In addition, it would help fund the development of a hydropower plant and oil and gas infrastructure.

 

Xi said China and Nigeria had been brought together by a common task of pursuing national development.

"China and Nigeria share the same goal of achieving prosperity for both countries, and this shared task brings our two countries together," said Jonathan.

China Oil Demand

China has experienced unprecedented growth over the last two decades to become the second largest economy in the world.

China relies on Africa for its soaring energy needs and other natural resources. Chinese demand for crude oil produced in Nigeria is expected to rise to 200,000 barrels per day (b/d)  by 2015 from the current 20,000 (b/d).

On his trip to Africa a few months before, Xi visited resource-rich nations in Africa, including the Republic of Congo, Tanzania and South Africa.

Nigeria is the largest oil producer in Africa but Nthe country still needs to radically overhaul its outdated infrastructure.

Chinese companies have already invested in building roads across Nigeria with contracts worth $1.7bn. The finalised loan is part of a $3bn funding tranche approved by China at interest rates less than 3%, according to the Nigerian Finance Minister.

Representatives from both countries signed five more deals, following a meeting between Xi and Jonathan.

They include a lending agreement between China's Import-Export Bank and the Nigerian finance ministry for the expansion of the airport terminals and an economic and technical cooperation pact. The finer details of the agreements were not revealed.

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