Despite fears being raised about the country’s increasing debt portfolio, the federal and state governments have reached an agreement to obtain fresh loans in the region of $9 billion from different international organisations
Rising from its statutory monthly meeting in Abuja, the National Economic Council, which comprises the 36 state governors and chaired by Vice President Namadi Sambo, the federal and state governments, after receiving briefing on the available facilities from the Minister of Finance and Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, decided to go for the loans.
Defending the decision to borrow, Governor Peter Obi of Anambra State said the National Assembly has already approved the borrowing plan for the 2013 to 2014 fiscal year, adding that the loans will be strictly for development projects.
Obi said: “The Coordinating Minister for the Economy briefed the Council on the current facilities made available by different international funding organizations, including the Islamic Development Bank, African Development Bank, French Development Agency as well as Chinese and Indian Exim Banks, totaling about $9 billion for projects development.
“The facilities, which have up to 10 years moratorium and 40 years repayment periods, are available to both the Federal and State Governments to fund high impact projects towards improving infrastructure, agriculture and employment generation.”
According to Obi, about $450 million of the loans, will be used to fund erosion projects in the South East states and Edo and Cross River States, adding that all the states have specific purposes for which they are getting the loan.
He said Council, therefore, urged the states to “meet the requirements for the loans and to ensure that the facilities are meant to fund meaningful projects in their states.”
In the same vein, NEC highlighted the need to source for and disburse immediately, the sum of N3.37 billion to close the huge gap between the required power generation and transmission capacity.
Governor Liyel Imoke explained that a Committee earlier set up on power highlighted the over $4 billion NIPP investment already made in generation, which has produced additional 4,774MW generation capacity by NDPHC and would have raised the overall generation capacity in Nigeria to 9,582 MW in December 2013 in line with the nation’s updated generation capacity target of 20,000 by 2020.
Imoke said: “It further noted that investing in the needed transmission infrastructure would ensure, among other benefits, the needed return on investment, the maximization of proceeds from the sale of the generation assets, improved GDP growth rate as well as ensure effective distribution of generated power to the ultimate consumers.
“As a means of solving the envisaged significant transmission constraint by the end of this year and bridging the gap for counterpart funding in hydro plants, the report recommended the following:
“Utilisation of the proceeds from sale of generation assets for reinvestment in transmission and hydro projects; Disbursement of $1.65 billion to fund critical transmission infrastructure; $1.72 billion to fund hydro generation; the sourcing and immediate release of USD 3.37 billion to bridge funding pending the realisation of proceeds from generation asset sale.”
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