The Lagos State House of Assembly during Plenary on Thursday, granted the Executive request for the conversion of the African Development Bank, AFDB loan to alleviate the debt obligations incurred by the State Government and be able to assume full ownership of Lekki Concession Company Limited, LCC.
It would be recalled that the request received from the Executive arm on Monday 21st June, 2021 was committed to Committee on Finance to further look into the request and report its findings to the House.
Giving his presentation, Chairman of the Committee, Hon. Rotimi Olowo, positioned that upon the buy-out of all the shareholdings interest of the Lekki Concession Company Limited, LCC by the State; Lagos State Government became the subsitting shareholders of LCC with 75% shareholding and the Office of Public Private Partnerships, shareholding 25% respectively.
He further stated in the report that the original $53.9 million loan obligation from a private sector facility, AFDB has been resolved after series of engagement between AFDB, LCC and the State Government to convert the loan to a public sector facility with the benefit of a considerable reduction in interest charges of 1.02% of $1.12million bi-annual as against the 4.12% of $2.746million per bi annual thus giving a savings of $1.16million bi-annual or $3.24milliom per annum.
The Committee therefore listed in their recommendations based on the observations that the House therefore grant the executive the approval to convert the AFDB loan to the public sector loan backed up by sovereign Federal Government guarantee on behalf of the State Government as well as;
Authorize the State Government to issue a counter guarantee in favor of the Federal Government along with an irrevocable standing payment order an Irrevocable Standing Payment Order, ISPO to deduct from Lagos State Government statutory allocations the amounts required to service the loan obligations until maturity in August 2034.
Debating on the report before the initial approval; Hon. Gbolahan Yishawu supported that the recommendation and request is a smart move as the interest rate will not injure what the State is spending on capital expenditure. He added that it reduces the interest risk as well as the rate by moving the loan from private sector to public sector.
Contributing, Hon. Abiodun Tobun while going in tandem with the recommendation of the Committee, is of the view that saving 3.1% in interest rate difference will further reduce the burden on the State Government and encourage the savings to be used to develop other sector.
In addition, Hon. Femi Saheed viewed that the restructure of the loan shows transparency in the State financing and gives add-on flexibility for the additional years granted for the repayment of the loan.
He deemed the request a standard financial procedure practiced all over the word.
Accordingly, the Speaker of the House, Rt. Hon. (Dr.) Mudashiru Obasa directed the Acting Clerk of the House, Mr. Olalekan Onafeko to send a clean copy of the resolution of the House to Mr. Governor, Mr. Babajide Sanwo-Olu.
