Story from Kenneth AFOR, Lagos
In order to ease the debt burden on Lagos Concession Company (LCC), the State House of Assembly has granted the request of the Governor, Mr Babajide Sanwo-Olu for the conversion of the African Development Bank (AfDB) loan to LCC, a privately owned organisation, for the State Government to take full ownership of the company.
This was achieved based on the request received from the Executive arm on Monday, June 21, 2021, and was handed to Committee on Finance to look into the report to make necessary recommendations to the House after its findings reports.
Giving his presentation, the Chairman of the Committee, Rotimi Olowo, positioned that upon the buy-out of all the shareholdings interest of LCC Limited by the State; Lagos State Government became the subsisting shareholders of LCC with 75 per cent shareholding and the Office of Public-Private Partnerships, shareholding 25 per cent respectively.
He further explained in the report that the original $53.9 million loan obligation from a private sector facility, AfDB had been resolved after series of engagements between AfDB, LCC, and the State Government to convert the loan to a public sector facility with the benefit of a considerable reduction in interest charges of 1.02 per cent of $1.12 million bi-annual as against the 4.12 per cent of $2.746 million per bi-annual thus giving a savings of $1.16 million bi-annual or $3.24 million per annum.
The House, therefore, granted the Executive the approval to convert the AfDB loan to the public sector loan backed up by sovereign Federal Government guarantee on behalf of the State Government as well as authorise the State Government to issue a counter-guarantee in favour of the Federal Government along with an irrevocable standing payment order, ISPO to deduct from Lagos State Government statutory allocations.
According to the report, the servicing of the loan obligations would be a maturity till August 2034.
Debating on the report before the initial approval; his counterpart, Gbolahan Yishawu supported that the recommendation, was a smart move as the interest rate would not injure what the State was spending on capital expenditure.
He added that it would also reduce the interest risk as well as the rate by moving the loan from the private to the public sector.
Another member, Abiodun Tobun who also supported the debate recommended that saving 3.1 per cent in interest rate difference would further reduce the burden on the State Government and encouraged the savings to be used to develop other sectors of the economy.
However, the Speaker of the House, Mudashiru Obasa directed the Acting Clerk of the House, Mr Olalekan Onafeko to send a clean copy of the resolution of the House to the Governor.
The LCC manages the two toll gates in Lekki in which the first was vandalised during last October’s #EndSARS protest in the state and across the country.
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