The Federal Executive Council (FEC) on Wednesday approved the sum of $200m for Lagos State to enable it complete some of its infrastructural development projects.
Speaking to State House Correspondents after the FEC meeting presided over by President Muhammadu Buhari, Minister of Power, Works and Housing, Babatunde Fashola pointed out that this is not a new loan as it was approved in 2010.
According to him, the loan which was sourced from the World Bank had initial agreements of a 40-year loan, a 10-year moratorium, 0.5 percent interest.
He, however, said the loan suffered setbacks because of the partisan political difference then between the former President Goodluck Jonathan‘s administration and Lagos State.
Fashola lamented that because of the partisanship that caused the delays, Nigeria had lost an opportunity of 40 years as it has now been reduced to 25 years.
He said, “the point to make is that this is not a new loan, it’s a segment of a programme of developmental initiatives and it was approved in 2010 with a total sum if $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.
He also pointed out that Edo, Rivers and Ekiti had earlier benefited from the loan from the World Bank adding that this is the way to grow the economy of Nigeria, for states to develop their initiatives, show them to World Bank which commits them to certain programmatic reforms in order to be entitled.
On how the loans will be paid he said” Perhaps people continue to wonder is 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.
On insinuations why an APC-controlled state is the first beneficiary in this administration he said, “I mentioned partisan differences because I remember when the delays came up, I was told by the then Minister of Finance that she was getting complaints from PDP Governors that it was only APC states that were benefitting at the time from the World Bank loans.
“So we got access when we were in opposition, because we qualified and we met the competitive conditions and one of the resolutions we have taken is that we must encourage other states who meet these kinds of conditions across the party lines to be able to access them, because it is competition that really brings productivity”, he said.
On his part, minister for Information, Lai Mohammed explained that the loan would allow the Lagos State government to complete some if it’s very ambitious projects, notably, the 61-kilometre 10-lane express way from Lagos to Badagry, which also includes some 7-kilometer light roads.
“It will also enable the state government to rehabilitate the inner roads in Apapa, in addition to some other major works going on.”