The Chairman, Lagos State House of Assembly Committee On Finance, Hon. Rotimi Olowo, on Thursday cleared the air on the approval granted the Executive arm of government concerning conversion of loan.
Olowo, while addressing Assembly Correspondents, said the clarification on the loan issue became necessary in view of reports in some media organizations that the House granted approval for the takeover of LCC by the state government.
He noted that the Lagos State government had since 2014 taken over LCC based on terms of agreement of 75% share holding and 25% by Public Private Partnership (PPP).
“The approval the governor sought for has to do with restructuring of the loan from private sector to public sector with supreme guarantee by the Federal Government. It connotes two different things.
“We have bought over LCC in 2014 and LCC is wholly owned by the state government, with 75% shareholding and Private Public Partnership owned 25%.
“When you look at it, PPP in Lagos state government is a matter of semantic. It still means that Lagos state government owns LCC 100%.
“When you look at the conditions for getting loan from Africa Development Bank (AFDB) basically if it has private connotation like PPP, obviously it will be private sector driven loan which comes at a higher interest rate of 4% with LIBOR of about 0.2%.
“The state governor was smart enough with the commissioner for finance, and economic planning that if LCC is wholly owned by the state then why not go for public sector loan which is about 0.8% and with a better gestation period of additional 50years.
“We should be mindful of the fact that the current loan is private sector and it attracts about 4%. When you add London Interbank Offer Rate (LIBOR) to it, it will be around 4.2% and that is what we have been doing. That will mature in about 2023 which is 2 years time and it will add pressure on the loan obligation of the state.
“When the current government came to us, within a week after anaysis looking at the benefits therein we appreciate the fact that it will extend the maturity date to around 2034 with a lower interest rate of about 0.8%. When you add LIBOR to it, it will be 1%. That is what they came for and that is what we approved,” Olowo said.
He pointed that government also intends to develop infrastructure in the Epe axis of the state considering the future establishment of Dangote Refinery amongst others which is expected to create employment opportunities for the youths.
The chairman said out of the $53.9million principal loan, $20.1million had been paid and that outstanding loan of $27.5million was restructured.
He identified African Development Bank as the bank that granted international aspect of the loan while Zenith, United Bank of Africa and First City Monument Bank granted the local loan.