Senate endorses Lagos $200m loan
The Senate on Wednesday okayed the inclusion of the Lagos state $200 million loan facility into the federal government 2012 - 2014 Medium Term Borrowing Plan (MTBP).
The approval was sequel to a letter from President Goodluck Jonathan asking for the Senate's endorsement of the loan for the southwest state of Lagos.
The senate took the decision after considering the report of the Sen. Ehigie Uzamere (APC-Edo) led committee on Local and Foreign Debts.
President Goodluck Jonathan had on Oct. 24, urged the National Assembly to include the Lagos State Development Policy Operation (DPO) of $200 million into the 2012-2014 MTBP.
Jonathan said the fund formed part of the credit of 600 million dollars granted to the Lagos State Government in 2010 for implementation in three batches. Jonathan's letter to the Senate President, Sen. David Mark, which was read during a plenary session, said the amount was not captured in the 2012-2014 MTBP.
'The World Bank approved a Development Policy Operation (Budget Support) for a total credit amount of 600 million dollars to the Lagos State Government in 2010.
'The fund is expected to be implemented in three tranches of 200 million dollars each.
'The first tranche was approved by the National Assembly in the 2010 Borrowing Plan,' he said.
According to him, the Development Policy Operation (DPO) 1 was implemented in 2011.
'However, given the importance of the second tranche to the success and sustainability of the first tranche, I wish to submit it for your consideration for inclusion in the current borrowing plan.
The loan, which is coming from the World Bank is expected to be used for the Ultra-Modern Burns Centre, cardiac and Renal Centres at Gbagada General Hospital, the 27 kilometre light rail along the Lagos Badagry Expressway and completion of the 70 million gallon per day Adiyan Water Facility.
Considering the report of the Senate Committee on Local and Foreign Debts, the lawmakers said that Lagos state has the capacity to pay back the loan.
Nigeria's fiscal responsibility laws requires such approval before any state procures foreign loan, which is part of measures put in place to avoid the country running into another debt trap.
Before the country exited the Paris and London Club debts in 2005, it owed close to $40 billion and was required to fork out more than $3 billion annually in principal and interest repayments.