Members of the Lagos State House of Assembly have granted the request of Governor Babajide Sanwo-Olu for state government to assume full ownership of Lekki Concession Company Limited (LCC).
It would be recalled that the request, received from the Executive arm on Monday 21st June, 2021 was committed to the Committee on Finance to further look into it and report its findings to the House.
Giving his presentation, Finance Committee Chairman, Hon. Rotimi Olowo, noted that upon the buy-out of all the shareholdings interest of the LCC; Lagos State government became the subsisting shareholders of the company with 75% shareholding, while the Office of Public Private Partnerships holds the remaining 25%.
He further stated in the report that the original $53.9 million loan obligation from African Development Bank (AFDB) had been resolved after series of engagement 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% of $1.12million bi-annual as against the 4.12% of $2.746million bi-annual thus giving a savings of $1.16million bi-annual or $3.24milliom per annum.
The House thereafter 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.
the lawmakers also authorized the state government to issue a counter guarantee in favour of the Federal Government along with an irrevocable standing payment order and an irrevocable Standing Payment Order (ISPO) to deduct from Lagos State government’s statutory allocations.
Debating on the report before the initial approval; Hon. Gbolahan Yishawu (Eti-Osa 2) supported the recommendation, saying that 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 private to public sector.
in his own contribution, Hon. Abiodun Tobun (Epe 1) while going in tandem with the recommendation of the Committee, stated that saving 3.1% in interest rate would further reduce the burden on the state government and encourage the savings to be used to develop other sectors of the economy.
Hon. Femi Saheed (Kosofe 2) said that the restructuring of the loan was an indication that there was transparency in the State financing, saying it gave add-on flexibility for the additional years granted for the repayment of the loan.
Saheed said that the request was a standard financial procedure practised all over the world.
The Speaker of the House, 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.