The Federal Executive Council (FEC) on Wednesday approved a $200 million World Bank loan for Lagos State.
It is the second tranche of a $600 million loan which the state will spend on roads and other infrastructure.
Minister of Information Lai Mohammed and Minister of Power, Works and Housing Babatunde Fashola, who told the media about the decision of the FEC to okay the facility, said the state took the first tranche in 2010 when Fashola was governor, but the second was not approved by the Dr. Goodluck Jonathan administration for partisan reasons.
There was a mild drama at the FEC meeting as President Muhammadu Buhari surprised many ministers when he arrived at the Council Chamber venue 10 minutes earlier than the 10am commencement time.
There were only 19 of the 36 ministers seated when he came in. Vice President Yemi Osinbajo had also not arrived at the chamber.
The President noted that he came too early but he immediately called for the rendition of the National Anthem and prayers for the meeting proceedings to begin.
Osinbajo and other ministers arrived later to joim the meeting before the 10:00 fixed starting time.
Briefing reporters, Mohammed said: “We just finished the Federal Executive Council meeting and the major item which will be of interest and was discussed and which the Council approved is the memo which was put forward by the Minister of Finance for approval to obtain additional $200 million loan from International Development Association (IDA), which is a window of the World Bank in support of the Lagos State development policy operation.”
He said the loan will allow Lagos State to complete its very ambitious projects.
Fashola, who initiated the loan, noted that the $200 million loan was a segment of a $600 million loan for a programme of developmental initiatives for Lagos State, which was approved in 2010.
According to him, it was supposed to come in trenches of $200 million each year from 2011 to 2013.
He noted that the loans suffered delays as a result of partisan political differences in the last administration.
He said: “After the first tranche was disbursed, there was freeze on the second tranche. The initial agreement we had with the World Bank was a 40-year loan, a 10-year moratorium, 0.5% interest.
“But because of the delays, the partisan interference that took place, our profile as a nation also changed. By the time this one was approved now because of the delays, we had lost the opportunity of the 40 years, it is now a loan of 25 years, the moratorium has reduced to five years instead of 10 years; the interest rate has gone up to 1.25 per cent.
“But what is still heartwarming about it is that it helps to finance infrastructure. When we look at roads construction and the value chain that benefit from it, the labourers, those who sell iron rods, artisans, craftsmen, that is how globally economics have been reflated,” he said.
Noting that Edo, Ekiti and Rivers states have also benefited from such loan, Fashola said the repayment is deducted at source from their Federation Account allocation.
Throwing light on the delays in granting the loan under former President Jonathan’s administration, Fashola said former Minister of Finance Ngozi Okonjo-Iweala was always telling him that there were complaints that only All Progressives Congress (APC)-controlled states were benefiting from the loan.