Adebayo Shittu said China Exim Bank and the manufacturer, China Great Wall, have agreed to pay for the new satellites after Nigeria renegotiated an earlier deal that had required it to cover 15% of the cost.
"This is a very big business opportunity ... which is ... why they have agreed that even without our ability to contribute 15% they are prepared to pay the entire sum of $550m for the procurement of the two new satellites for Nigeria," Shittu told reporters in the capital Abuja.
He said the satellite will be launched after a two-year production period starting from when the paperwork is signed.
Nigeria has nothing to lose
The minister said the funds were not a loan but the Chinese company will take an equity stake in Nigcomsat, a limited liability company owned the Nigerian government and responsible for managing satellite communications.
Both parties will agree on a percentage share, Shittu said, adding that Nigeria "has nothing to lose because we are not putting anything into it in terms of financial resources."
Shittu said the Chinese would help market satellite communication services to other African countries which would compete with current providers from Israel, Britain and the United States.
"The first thing is that we want to make a profit, we want to capture the local market and we also want to capture the African market," he said.