The Lagos state House of Assembly through the Chairman House Committee On Finance, Hon. Rotimi Olowo,has unequivocally declared that the approval granted the Executive arm of government as regards loan conversion was to better protect economic interest of the state.
Olowo, while addressing the Assembly Correspondents, said that the issue of the loan conversion was paramount because of the need to jerk up Infrastructure along the Epe corridor to boost ease of doing business there.
The Committee Chairman noted that the Lagos state government had taken over LCC since 2014
based on terms of agreement of 75% share holding by Lagos state government and 25% by Public Private Partnership (PPP).
” The approval the governor sought for has much to do with restructuring of the loan from private sector to public sector with supreme guarantee by the federal government.
It connotes two different things. We have bought over LCC in 2014 and LCC is wholly owned by the state government structured with shareholding basically Lagos state government 75% and Private Public Partnership owned 25%.
” When you look at it, PPP in Lagos state government is a matter of semantic, it still means that Lagos state government owns LCC 100%. When you look at the conditions for getting loan from Africa Development Bank (AFDB) basically if it has private connotation like PPP obviously it will be private sector driven loan which comes at a higher interest rate of 4% with liable of about 0.2%.
The state governor was smart enough with the Commissioner for finance, and economic planning that if LCC is wholly owned by the state then why not go for public sector loan which is about 0.8% and with a better gestation period of additional 50years.
” We should be mindful of the fact that the current loan is private sector and it attracts about 4%. When you add LIBOR interest rate, it will be around 4.2% and that is what we have been paying. That will mature in about 2023 which is 2years time and it will add pressure on the loan obligation of the state.
” We reasoned with the state government that if it is structured as a private sector loan which there was agreement since 2019 and because nobody has approached the House for our concurrent we did not know. When the current government came to us, within a week after anaysis looking at the benefits therein we appreciate the fact that it will extend the maturity date to around 2034 with a lower interest rate of about 0.8%. When you add LIBOR to it, it will be 1%. That is what they came for and that is what we approved”, said Olowo
He posited that the LCC concept was birthed due to government’s intention to develop infrastructure in the Epe axis of the state, considering the future establishment of Dangote Refinery amongst others,which is expected to create employment opportunities.
The chairman said out of the $53.9million principal loan, $20.1million had been paid and that outstanding loan of $27.5million was to be restructured.
He identified African Development Bank as the bank the international borrower while the local loans were sourced from Zenith, United Bank of Africa and First City Monument Bank.