The Federal Executive Council (FEC) has approved $200 million loan for Lagos State government to complete some ongoing critical projects in the state.
The FEC meeting held at the Presidential Villa, Abuja, was presided over by President Muhammadu Buhari, approved the loan which would be sourced from the World Bank.
The approval OF $200 million for Lagos by FEC brings to two the number of state that have enjoyed such facility after a similar approval was given to Edo state.
Addressing State House correspondents shortly after the meeting, Minister of Power, Works and Housing, Babatunde Fashola, explained that the loan was not new as part of it had been collected by past Lagos state administration.
Fashola stated that the delay in approving the balance was based on the political differences between the Lagos State government and the Federal Government then, adding 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.
He explained that the loan was initially $600 million and that the agreement was made in 2011.
The former governor explained that it was agreed that the money would be released in tranches of $200 yearly but that it suffered delays due to political differences.
According to him, “The point to make is that this is not a new loan. It is a segment of 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 per cent interest. But because of the delays that subsequently characterized the partisan interference that took place, our profile as a nation also changed. We had become a bigger economy although 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.”
He continued, “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.
The initiatives, he said should be taken seriously by the States to enable them compete with one another.
“It’s is heartwarming that this administration has taken it on and again fast tracked 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. That the World Bank has had the confidence now to lend sums 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 and Edo has also benefitted, so also were Ekiti and I think Rivers and I believe this is the way to grow the economy of Nigeria. The States should develop their initiatives; show them to WB, which commits them to certain programmatic reforms in order to be entitled, so it is a very competitive thing.”
Speaking further, he said, “Perhaps people continue to wonder if these monies are paid. Loans like these are actually deducted at source at monthly FAAC meetings. So the risk of defaults of these kinds of loan is very minimal. So, these are part of deductions that come to every state once the FAAC accounts are rendered, your loan obligations would be factored.”
Meanwhile, there was a mild drama as President Buhari arrived the meeting venue earlier, when some of the ministers were yet to arrive.
The president, who noticed that some of his ministers were not around said, “I came too early,” but directed the rendition of national anthem, after which the FEC meeting commenced.
