…says Approval by State Assembly Was For Loan Conversion
The Lagos State Government has debunked the report that the state House of Assembly has granted it the go-ahead to take over the Lekki Concession Company (LCC).
Commissioner for Information, Mr. Gbenga Omotoso, said in a statement that the government did not make such a request.
Its request was to convert the African Development Bank loan from a private sector (commercial) loan to a sovereign (public sector) loan, which attracts a lower interest rate. This will enable the company to make some savings, Omotosho said.
“The government, in fact, acquired the full shares/equity of the former owners of the company in 2014. There was no need to take such a request to the House.
“Following the Lagos State Government’s full ownership of LCC in December 2014, the loan became eligible for conversion to a sovereign facility with an attendant significant lower interest rate of LIBOR plus 80 basis points and extended tenor.
“In the recent past, there have been discussions amongst LCC/LASG, AfDB and the relevant Federal Government Ministries and Agencies concerning conversion of the loan to a Sovereign facility. Upon the completion of the conversion, there will be a significant reduction of applicable interest rate and extended tenor,” he added.
According to him, the sovereign loan conversion will also lead to a crash of the applicable interest rate on the facility to circa 1.8%pa compared to the current interest rate of circa 4.12% p.a. Besides, the conversion will increase the tenor of the facility from the current five years to 15 years.
This has the impact of spreading the cash flow impact by an additional 10 years.