Minister of Power, Works and Housing, Babatunde Fasola who spoke to news men shortly after the meeting of the Federal Executive Council (FEC), presided over by President Buhari, said that the loan was approved in 2010 by the Federal Government with an initial moratorium of 10 years and a repayment period of 40 years.
The loan which will be sourced from the World Bank, is the first major approval of such facility for any state government by the President Buhari-led administration.
Fasola said that the loan is not entirely a new one as part of it had been collected during the past administration even as he said that the delay in approving the balance of the loan was due to partisan political differences as Lagos State was being controlled by a different political party other than that of the government at the centre.
He regretted that due to the branding of Nigeria as the largest economy in Africa at the moment, the terms and conditions of the loan had changed with a reduction of moratorium period to only five years, repayment period to 25 years and an imposition of 2.5 percent interest rate.
“The point to make is that this is not a new loan, it’s a segment if a programme of developmental initiatives and it was approved in 2010 with a total sum of $600 million for Lagos State to be disbursed in tranches of 200 million each year starting from 2011-2013. But it suffered delays as a result of partisan political differences in the last dispensation. After the first tranch was disbursed, there was a freeze on the second tranch.
“The initial agreements we had with the World Bank was a 40-year loan, a 10-year moratorium, 0.5 percent interest. But because of the delays that subsequently characterised the partisan interference that took place, our profile as a nation also changed; we had become a bigger economy so money was being lent to us not now as a highly indebted nation anymore. So by the time this one was approved now because of the delays, we had lost the opportunity of 40
years as it is now a loan of 25 years, the moratorium has reduced to five years instead of 10 years. The interest rate had gone up to 2.5 percent
“But what is still heart-warning about it is that it helps to finance infrastructure. When we look at road construction and the value chain that people benefit from it, labourers, those shops that sell iron rods, artisans, craftsmen, that means, really globally, economies are being reflated and infrastructure defines how big a nation can grow; it is the defining line between poor and rich nations.”
Fasola in whose era as Lagos State governor the first tranch of the loan was received, however, expressed gratitude that the government of the day at the centre had given approval for the loan to complete the numerous roads and other projects that were started.
He said that the resolve by the World Bank to provide the money was a testament that the foremost financial institution had confidence in the Federal Government and its current fiscal measures.
“It’s is heartwarming that this administration has taken it on, and again fast track it so that the Lagos State government can continue its developmental programmes of infrastructure renewal; taking people out of poverty, reducing inequality because that’s the way to really distribute wealth in a society.
“And that the World Bank has had the confidence now to lend sums in tantamount to sub-national government is a testament of financial discipline, strong governmental structures and the establishment of institutions, rather than the World Bank writing programmes for those states,” according to the minister.
Fasola who was former Lagos Governor, said that the Finance Minister and Coordinating Minister in the past administration, Dr. Ngozi Okonjo-Iweala had confided in him that the second tranch of the loan was frustrated because some PDP governors were complaining that only the then opposition states were benefiting.
Meanwhile, a mild drama preceded the commencement of Wednesday’s FEC meeting.
President Buhari shocked Vice President Yemi Osinbajo and other cabinet members by arriving at the Council Chambers of the State House at 9.51am for the FECl meeting scheduled for 10.00am.
Osinbajo, Chief of Staff, Alhaji Abba Kyari, National Security Adviser Babagana Monguno and 19 ministers were yet to turn up when Buhari arrived for the meeting.
After a quick glance at the few ministers who had taken their seats, Buhari remarked: “I came too early.”
The president then asked for the recitation of the National Anthem and the meeting began immediately.
Osinbajo and others however arrived about five minutes into the meeting and were said to be admitted through the tea room as the main door had been shut soon after the President’s arrival in consonance with protocol. [myad]
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