FEC approves $200m IDA loan for Lagos projects

The Federal Executive Council (FEC) on Wednesday approved a $200 million International Development Association (IDA) loan for projects in Lagos State.

The approved sum is the second tranche of a $600 million running loan approved in 2010 for series of developmental initiatives for the state. The loan was to be disbursed in tranches of N200 million each year starting from 2011-2013, but encountered delay after the first release.

President Goodluck Jonathan had on October 24, 2013 written to the National Assembly to include the Lagos State Development Policy Operation (DPO) of $200 million into the 2012-2014 Medium Term Borrowing Plan (MTBP), stating that the fund formed part of the credit of $600 million granted to the Lagos State government in 2010 for implementation in three batches.

Briefing journalists after the FEC meeting presided by President Muhammadu Buhari, Minister of Information and Culture, Lai Mohammed, said the loan would allow the state government to complete some of its ambitious projects like the 61-kilometre 10-lane expressway from Lagos to Badagry, which also includes some 7-kilometre light rails. It will also enable the state government to completely rehabilitate the inner roads in Apapa in addition to some other major on-going works.

The approval was made following a memo submitted to the council by the Minister of Finance, Kemi Adeosun.

Minister of Power, Works and Housing, Mr. Babatunde Fashola, also told journalists that the initial agreement was that the World Bank loan will be paid in 40 years, with a 10-year moratorium and 0.5 percent interest, however, 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”.

He said because of the delays, the opportunity of repaying in 40 years has been lost as the loan is now for 25 years and the moratorium has reduced to five years instead of 10 years. The interest rate has also gone up to 2.5 percent.

“But what is still heart-warming about it is that it helps to finance infrastructure”, he said.

He added that it is heart-warming that the Buhari led administration has 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.

Fashola cleared insinuations that a state controlled by the All Progressives Congress (APC) was the first to benefit from approvals at the FEC, siting partisan differences in the past administration.

According to him: “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”.