Nigeria, China Signs $550m Satellites Deal

The Nigerian government has signed an agreement with China that will ensure that it provide $550 million towards the purchase of two additional satellites for subsequent launch into the space in 2020.
The China Exim Bank and China Great Walls, the manufacturers agreed to fund the project 100 % following Nigeria’s inability to fulfil the initial agreement it reached with China to provide 15 % of the $550 million.
Nigeria’s Minister of Communications, Mr. Adebayo Shittu, told journalist at the State House after a meeting with President Muhammadu Buhari of Nigeria that its satellite communications have hitherto been ineffective because the federal government-owned satellite company, NigComSat has only one satellite which he said could not guarantee the confidence of prospective customers.
He said the development compelled companies operating in Nigeria to purchase satellite communications data abroad, adding that after the formal signing of agreement for the take-off of the project which he said would take-off on January 27, the manufacturing of the satellites will commence.
He noted that after the formal manufacturing process has eventually commenced, it will take another two years for the launch of the satellites which he said was conceived to take the entire satellite communications market in Nigeria and the entire African continent.
Shittu further said the president was excited by the development, stressing that the president was however, not surprised by the output of the renegotiation which saw China agreeing to funding the entire project, saying China knew the immense potentials embedded in the Nigeria’s satellite communications market.
According to the Minister, the sum of $550 million fund is not a loan but rather an equity which he said would be predicated on profit sharing agreement between Nigeria and the Chinese companies adding that Nigeria will not be outwitted in the sharing of the profit because it has brought nothing to the table as he explained that profit will be shared on the basis of an agreed ratio.
He emphasised that the project was not meant for job creation but rather meant to serve as the platform for the conquest of the entire of African satellite market, explaining that once the satellites are launched, all companies operating in Nigeria would be barred from patronising foreign companies for their satellite communications data.
“Initially, the agreement was that they would provide the cost of the two satellites at the cost of $550 million minus 15 % which is to be the counterpart fund.
“Because we could not afford this 15 per cent, we have renegotiated with China Exim Bank and China Great Walls, the manufacturers, and they have happily agreed to pay the extra sum of $550 million to provide two new satellites.
“Already, we have one satellite over the last seven years. Having two new ones is to ensure that the Nigerian satellite company can conquer the entire African continent with regards to the provision of satellite communication services.
“It is a very big business opportunity and I am sure that the Chinese appreciate the potential market that is so versed and that is why they agreed in spite of our inability to provide 15 %, that they are prepared to bring the entire sum of $550 million for the procurement of the two satellites.
“It takes two years to make a release because it is after signing of the papers that they will start production and that takes two years. So, we hope that at the end of this month, we will be able to sign the papers and then, they will commence the manufacturing of the satellites and it is after the conclusion of the manufacturing, that these two new satellites will be launched into the space.
“It is not a loan. It will be an equity participation of the Chinese company in our business. Nigcomsat is a limited liability company owned entirely by the federal government. So, they are paying that to finance these highly required facilities and it will be with their counterparts that thy will agree on the percentage for profit sharing. Of course, Nigeria has not been introduced because we have not put anything into it in terms of financial resources.
“He (the president) was excited but he was not surprised because he appreciated that the Chinese appreciated the immense or unlimited opportunities which we offer. So, the president, conscious of the entire gamut of satellite communications, was not surprised that Chinese agreed to pay 100 % of it.
“We already know the cost of it. We will then project into what will be the profit and then, we will agree on what will be the ratio by ratio basis. Already, we also have the idea of bringing it and we have ground facilities which will also be valued into the entire system and so, that will not be difficult to agree upon when the time comes.
“You see, Nigeria has been losing because with one satellite, the subscriber or the customer does not have confidence in the company which has just one satellite. If you have just one satellite and there is a problem with that satellite, they will lose their entire data.
“It is just like somebody going to Lagos and he gets to a garage and meets a vehicle that does not have a spare tyre, he will not have confidence in it because when they have tyre burst on the way, they ‘ll be in trouble because they will be stuck in the bush. “So, now that we are having additional satellites, we can now go ahead, not just to market our services to the entire continent but to also insist that all Nigerian entities must patronise Nigerian satellite company, rather than going to the US or UK for services, now, we can say, ‘no, our local content policies say you must patronise Nigeria.
“The major issue is not about employment. It is about providing satellite services to all companies which require it. Currently, most Nigerian companies, even Nigerian government establishments patronise foreign statellite companies. So, the first thing is profit. We want to capture the local market. We also want to capture African satellite market,” he said.
Asked if Nigeria would intervene in the seizure of Globalcom operating licence in Benin Republic, he said the government had not been notified and would not intervene unless Globalcom makes formal complaint about it.
“Well, it has not been brought to our notice. Globalcom is a private Nigerian company which has right to offshore business. If they approach us, that means we must intervene but the first thing must come from the company first on whatever is happening in Benin Republic,” he added.


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