Vunderkind
Social Member
The Federal Executive Council (FEC) on Wednesday in Abuja approved the borrowing of 170 million dollars from the French Development Agency to boost electricity supply in the Federal Capital Territory (FCT).
The Minister of Information, Mr Labaran Maku, said this when he briefed State House correspondents on the outcome of the weekly FEC meeting, chaired by President Goodluck Jonathan.
He said an earlier anticipatory approval was given to the Federal Ministry of Finance to borrow the amount from the agency to beef up power infrastructure in the FCT.
‘‘The loan, which is usually given on exceptionally concessionary grounds by the French Government to very friendly countries, and in this instance when the French President visited, the two leaders accepted the need for this loan, which is to support the power infrastructure in Abuja.
‘‘Abuja is one of the fastest growing cities in the world and certainly the fastest growing city in the continent of Africa.
‘‘We need to continually update infrastructure, particularly power supply, to the city as it expands from the city centre outwards.’’
According to him, the loan will be used to undertake 270-kilometre transmission lines and the construction of additional substations within the FCT.
He said the loan would also be utilised in building additional power substations in the FCT to boost power supply.
‘‘We are happy because this loan was taken and it shows the confidence of the French government in the Nigerian economy.’’
Also speaking on the soft loan, the Minister of Finance and the Coordinating Minister of the Economy, Dr Ngozi Okonjo-Iweala, said the loan was for 20 years with seven years grace period.
She said its terms included 1.56 percent interest rate per annum, commitment charge of 0.5 per cent per annum and a service charge of 0.25 percent per annum payable on the amount withdrawn.
According to her, the Federal Ministry of Power has set forward an emergency transmission programme for the entire country requiring 1.9 billion dollars.
She said that the Federal Government had been able to raise 1.2 billion dollars so far of very soft credit, saying that the 170 million dollars from the French Development Agency was part of that package.
‘’This project has been approved in the borrowing plan since 2010. It was shelved until we asked the French development agency to renew it and fast track it and that is how we came to approve that today.’’
The minister also stated that the council approved Diaspora Bond and the N80 billion Global Depository Notes.
‘‘So, we came up with the idea of floating a Diaspora Bond. The size will be anywhere from 100 million dollars to 300 million dollars and the idea is to have them invest this in infrastructure basically in the country.
‘’So, it will be in an infrastructure projects that most of them can see and feel and that is what many of them in our soundings from the Diaspora abroad have said they will like to invest in this.’’
She said that the Federal Ministry of Finance would soon appoint consultants and the transaction parties for the bond and the Depository Notes.
She noted that few countries, including Israel and India, had successfully floated the bond.
She said the N80 billion was another Federal Government bond meant to finance this year’s budget.
‘‘This is part of our regular borrowing programme for this year, so we are not adding anything to it.
‘‘Out of the N522 billion we said we will borrow this year to help finance the budget.
``What we are saying is that the N80 billion we are going to float it in something called Global Depository Notes.
This is an arrangement you make when you want to diversify and enlarge the universe of those nesting in your bonds.
We will work with an international bank that can issue these notes to people outside.
‘‘They may be foreign investors who want to invest in Nigeria but their laws do not allow them to invest directly in another domestic currency.
‘‘What they do is working with these international bank; the international bank can arrange to have them facilitate the investment in our own naira by issuing this notes which they can then invest in and purchase,’’ he said.
