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NigComSat 2, 3, not about loans but equity participation by Nigeria, China—Minister

The Minister of Communications, Mr. Adebayo Shittu, has said that current move by the federal government to acquire two new orbiting satellites will not be funded by loans, but equity participation by the Nigerian government and Chinese investors.

Already, Chinese satellite manufacturer, Great Wall Industry Corporation of China, is set to make $550m equity investment in the Nigeria Communications Limited to raise Nigeria’s satellite from one to three as soon as possible.

Otherwise, the expected two satellites which the Minister failed to reveal what they are for and the value they will add to the economy will be product of equity investments.

Shittu added that his ministry has set up a committee to evaluate the assets of the NigComSat to determine what percentage of equity that the Chinese firm’s $550m will translate into before a deal is signed between the two entities.

According to him, the initial plan was to take a loan from the EXIM Bank of China for the construction of the two satellites but government had to renegotiate with the Chinese when it became obvious that the country could not afford the counterpart funding of 15 per cent required.

The minister explained that “In the area of satellite communications, we have one satellite in the orbit. Today, rather than one satellite, we are looking at acquiring two more satellites. We were not only able to get the China EXIM Bank to procure two more satellites, we have got them to agree to fully finance the satellites.

“It is not a loan. We have a policy of discouraging taking of loans in this government unless it becomes extremely inevitable. For NigComSat 2 and 3, it is not about a loan; it is about equity participation.

“We will have to quantify all the ground equipment and one satellite. The two satellites they are bringing in cost $550m. Now, we will have to quantify the cost of one satellite that we have and the cost of the ground infrastructure. A committee is looking into all of that before we sign the deal.”

On what Nigeria stands to gain from the two facilities, Shittu argued that “It is justified in the sense that we are looking at a business, whose potential is limitless if we have these extras. “The good thing now is that the company, which is sponsoring it, is bringing the satellites without our government having to spend a kobo. They are coming in with those two satellites as their equity participation in the running of NigComSat-1R.”

“By the time we acquire those two satellites, we will have the capacity to cover the whole of Africa. We will also get customers from outside the country. Today, millions of dollars are being spent on satellite companies abroad. Customers do not have confidence in a company that has only one satellite.”

He was however quick to note that the absence of redundancy capacity was responsible for lack of patronage of the existing communications satellite operated by NigComSat Limited.

Continuing, he recalled that “We had NigComSat-1, which crashed. If we don’t have a backup, naturally people will not have confidence because they will think that, if they put their data in it, it can crash and they will lose all their data, and that is why they go overseas. I believe that if we have a backup (this is a big business), we can have the whole of the African continent and even beyond as a potential market,” he noted.