Senate Blocks Ogun, Kaduna, Kano From External Borrowing
ABUJA, Feb 23, (THEWILL) - The Senate today blocked the states of Ogun, Kaduna and Kano states from borrowing funds from foreign financial institutions to finance some projects in their respective states.
This was the highpoint of a Senate report on the final batch of the 2010 external borrowing plan.
The Senate however approved plans for the federal government and some states to access funding facilities from Islamic Development Bank (IDB), the International Development Association (IDA), French Development Agency (FDA) and Indian Line of Credit.
The Senate had late last year approved the second batch of the 2010 external borrowing plan in which they excluded the states but approved the federal government’s request to borrow $1.537 billion out of the overall $3.702 billion based on the repeated appeals by President Goodluck Jonathan.
The first approval was in April 2010 when the lawmakers partially approved $915 million out of the $5.22 billion loan amount proposed under the 2010 borrowing plan leaving out $4.31 billion.
The Senate’s objection to the request by Ogun State followed its inability to reconcile its requested loan amount with the one approved by the ministry of finance.
Also, Kaduna State was denied approval because they were yet to finish negotiations with the lending agencies.
According to the Senate Joint Committee on Finance, and National Planning, Economic Affairs and Poverty Alleviation that appraised the loan requests, Kano State’s request was turned down because they refused to show up at the National Assembly to defend their request.
The Senate however, approved the request of fifteen states and the Power Holding Company of Nigeria to borrow a total sum of $1.137 billion from various lending agencies.
The loan amounts will be applied to power and energy projects, rural access and mobility projects, special intervention for infrastructural developments in some states and social program developments in others.
The outstanding 2010 external borrowing plan is made up of 12 projects. Eight of them belong to 16 states, three for the federal government and the remaining is shared between the states and federal government.
The benefiting states include Lagos, Abia, Oyo, Imo, Taraba, Plateau, Osun, Adamawa and Edo. Others include Kebbi, Niger, and Ondo. Cross River and Enugu states got partial approvals for the request because of some discrepancy between their request amount and that approved by the finance ministry.
According to the Senate committees that worked on the report, the approved borrowings have met the new external borrowing guidelines.
“(They all) have more than 35% concession as required by the borrowing guidelines,” Ahmed Makarfi, who headed the committee, said. “This is a total departure from the previous external debt pattern, when Nigeria was borrowing under severe and unfavourable terms and condition from the international capital market. About 75 percent of the loans attract an interest rate of 0.7 percent per annum, while the remaining 25 percent attract an interest charge not exceeding 2 percent per annum.”
The loans and credits would be secured on concessionary terms with repayment periods of 25 to 40 years and moratoriums of 7 to 10 years.