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FG approves $403m loans for Lagos, Rivers, Ogun, Osun

By on February 27, 2015

The Federal Executive Council on Wednesday approved the request of Lagos, Rivers, Ogun and Osun states to obtain foreign loans totalling about $403m, among other approvals.

It also approved a $1.2bn multi-donor credit for the establishment of the proposed Development Bank of Nigeria.

Other foreign loans totalling $295m were approved for developmental projects across the country.

The different foreign facilities were approved at a meeting of the council presided over by Vice President Namadi Sambo.

President Goodluck Jonathan was absent at the meeting because he travelled to Sokoto where he attended the 90th birthday of former President Shehu Shagari.

The Minister of Aviation, Mr. Osita Chidoka; Minister of State for Finance, Ambassador Bashir Yuguda; Minister of Water Resources, Mrs. Sarah Ochekpe; and Minister of Education, Mallam Ibrahim Shekarau, briefed State House correspondents at the end of the meeting.

Yuguda said the fact that most of the loans guaranteed by the Federal Government were for states being governed by the All Progressives Congress further confirmed Jonathan’s position that he was the President of all Nigerians.

He said the President had made a distinction between governance and politics, and would not trivialise his office for any reason.

According to the minister, the council approved the request for a $100m credit from the French Development Agency in support of the Lagos Integrated Urban Development Project (Eko-UP).

“The facility is meant to improve living conditions of the most vulnerable urban population of metropolitan Lagos, improve the management and treatment of solid waste, strengthen the capacity of Lagos State and implement urban development projects in Lagos State,” he explained.

Yuguda gave the repayment period of the loan as 20 years, including seven years moratorium as well as commitment fee of 0.25 per cent of the total per annum and an appraisal fee of 0.25 per cent.

The project has three major components: slum upgrading in Ifelodun and Bariga Local Council Development Areas by the Lagos State Urban Renewal Authority; construction of solid waste management facilities by the Lagos State Waste Management Authority; and provision of capacity building and technical assistance for LASURA, LAWMA, the Project Management Unit and the two LCDAs.

For Rivers State, Yuguda said the council gave approval for the $200m African Development Bank’s credit facility for the proposed Port Harcourt water supply and sanitation project as well as an African Development Fund credit of $5m to support the Urban Water Sector Reform Project.

Yuguda said the credit facility would be secured from ADB with a repayment period of 15 years and five years moratorium, adding that the interest was enhanced variable spread loan, with lending spread of 0.60 per cent per annum, translating to 1.56 per cent.

For the ADF, he said the principal would be repaid over a period of 22 years, with eight years grace period and interest rate of one per cent per annum.

According to the minister, the council also approved a $33.174m credit from the French Development Agency in support of the Ogun State Water Supply Project.

He said the facility would be secured from the FDA on blend terms, with an interest rate of six months Libor plus margin; repayment period of 20 years, including seven years moratorium; commitment fee of 0.25 per cent per annum and an appraisal fee of 0.25 per cent.

Yuguda explained that the credit would be on-lend to Ogun State on the same terms and conditions offered by the FDA to the Federal Government.

For Osun State, he said the council approved an Islamic Development Bank’s loan of $65m for financing water supply and sanitation projects in the state, adding that the loan would be repaid over 15 years, gestation period of four years and mark-up Libor + 155bps or to 1.5 per cent per annum.

On the $1.280bn for the establishment of the proposed Development Bank of Nigeria, the minister said the loan would come from the International Bank for Reconstruction and Development, World Bank, Africa Development Bank as well as the Germany and French Development Agencies in the sums of $500m, $450m, $200m and $130m, respectively.

He said the proposed bank would give credit facilities to micro, small and medium enterprises in the country.