Reps okay $7.9bn foreign loans

The House of Representatives yesterday caved in to pressure from state governors and the Federal Government by approving the plan to take $7.9 billion foreign loans from international creditors.

States that are benefitting from the borrowing are Kaduna, Kano, Lagos, Borno, Ondo, Adamawa, Nasarawa, Cross River, Abia, Anambra, Ebonyi, Enugu, Imo, Edo, Kebbi, Katsina, Osun, Niger, Kwara, Bauchi, Jigawa, Sokoto, Gombe and Ekiti.

The House yesterday adopted the report of its Committee on Aids, Loans and Debt Management chaired by Rep. Adeyinka Ajayi which held public hearings on the loans and recommended that the request be okayed.

The committee report recommended the approval of the loans which are for the so-called pipeline projects under the Medium Term External Borrowing Plan of 2012 to 2014.

But the House removed Yobe State and the Federal Capital Territory Authority (FCTA) among the beneficiaries because of their failure to appear before the committee to explain why they needed the funds.

This means the FCT lost its bid to borrow $500 million for the Abuja Light Rail Project from the Exim Bank of China.

The House approval came just a week after the Nigerian Governors Forum decided to press the lawmakers to approve the loans package following indications that the National Assembly was not keen at it.

Lawmakers had expressed skepticism on the borrowing plan, with some of them accusing President Jonathan of leading the nation into debt trap.

Government officials defended the borrowing, saying the loans are tied to specific Federal and state projects, with long-term moratorium and low interest rates.

But a Daily Trust analysis show that the loans package is full of pitfalls as it will end up funneling back at least $5.34 billion to the lenders in interests, service charges, commitment charges and management fees within the 10-year moratorium period alone.

The foreign loans are being taken from several international creditor institutions including the World Bank, African Development Bank, Islamic Development Bank and French Development Agency.

Based on the borrowing plans, Niger State is asking for $78 million for rural mobility, $14 million for irrigation and $32 million for FADAMA, while Anambra wants $75 million to control erosion and flood.

Lagos State got approval for $200 million as the second tranche of its $600 million loan plan. Enugu said it intends to spend $50 million for watershed management project, $40 million for youth empowerment, and $40 million for energy project from the loan package.

Other expenditure plans from the loans upgrading of hospital facilities in Kaduna State ($44.69 million) and science secondary schools in Kaduna ($17.32 million).

Nigeria’s external debt stands at $6.296 billion as at the end of September.

This is coming just few years after Nigeria exited the Paris Club of creditors following the buying back of $12 billion and a debt relief of $18 billion in 2005.