By The Lagos State House of Assembly has approved the request of Governor Babajide Sanwo-Olu for the conversion of the Lekki Concession Company Limited (LCC) to a full government-owned firm.
The Assembly had on, Monday, June 21, 2021, received the request from the executive arm and committed to the House Committee on Finance to further look into it and report its findings.
While giving his presentation, the Chairman of the Committee, Hon. Rotimi Olowo said upon the buy-out of all the shareholdings interest of the LCC by the state, the 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.
Olowo added 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 percent of $1.12million bi-annual as against the 4.12 percent of $2.746million per bi-annual thus giving a savings of $1.16million bi-annual or $3.24milliom per annum.
The Assembly granted the executive the approval to convert the AFDB loan to the public sector loan backed up by sovereign Federal Government (FG) guarantee on behalf of the state government.
It also authorized the state government to issue a counter-guarantee in favour of the federal government along with an irrevocable standing payment order, 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, Hon. Gbolahan Yishawu, supported the recommendation, saying it 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.
In his contribution, Hon. Abiodun Tobu stated that saving 3.1% 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.
According to Hon. Femi Saheed, the restructure of the loan was an indication that transparency in the State financing, saying it gave add-on flexibility for the additional years granted for the repayment of the loan.
He deemed the request a standard financial procedure practised all over the world.
The Speaker, Rt. Hon. 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.
