Lagos State Government reserves N100.7bn to pay its debts

 

Report gathered that Lagos State Government on Wednesday said it had fine-tuned its financial strategy to ensure that funds it borrowed were repaid.

The government added that N100.73bn had been reserved in the state’s sinking fund reserve to pay its debts.

The Commissioner for Finance, Mr. Ayo Gbeleyi, said this on Wednesday in Lagos.

He added that although it had N225bn outstanding in its debt issuance programme, over N100.73bn had been saved as of March 2015 to pay it back.

He said, “Fifteen per cent of the monthly Internally Generated Revenue is transferred to a Consolidated Debt Service Account, managed by independent trustees, with N100.73bn accrued in sinking fund reserve for repayment of outstanding issues, while coupons are serviced regularly.”

He said the government had the approval of the Lagos State House of Assembly for the buy-back of the Lekki-Epe Expressway, adding that the negotiated price for that transaction was N15bn.

Gbeleyi said, “The transaction came to closure in June last year. The payment was done in two tranches of N7.5bn and N7.5bn.

“We paid the second tranche last year December. And from that date, the government took effective control of the project.”

The commissioner further explained that after listening to the requests of the residents, the government decided to cancel the initial planned third toll plaza on the road.

“For the purpose of the Public Private Partnership project finance, one will find two sources of finances; that is debt and equity. The equity is provided by promoters of the ventures. The debt is provided by various members – commercial banks and other financial institution.

“On the road, we have about N40bn outstanding to this consortium of senior lenders which are eight financial institutions, including the African Development Bank and First Bank Plc.

“Thus, even though the state bought out equity interest in the transaction, the debt exposure must still be honoured over agreed contracted terms and conditions.

“We must send the right signal to the community of investors and we must respect the sanctity of contract, rule of law and predictability of investment. It is something that is sacrosanct if we must continue to attract the right investor to the state.”

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