$29.960bn foreign loan will be spent on infrastructure

Finance Minister, Mrs. Kemi Adeosun, yesterday gave some insight on the Federal Government’s borrowing plans and how it intends to spend the  $29.960 billion foreign loans to address infrastructure deficit in the country.

Speaking through her Special Assistant, Media, Festus Akanbi, Adeosun said the external borrowing remains a three-year plan designed to cover proposed projects that will be delivered between 2016 and 2018. “As such, the borrowings will be phased over a three-year period,” she added.

The Minister also said that the borrowings are highly concessional (non-commercial), with low interest rates and longer tenors.

“The funding is being sought from multilateral institutions including the World Bank, African Development Bank (AfDB), Islamic Development Bank (IDB), Japan International Co-operation Agency (JICA) and China EximBank. The planned eurobond issuance in the international capital markets is the only commercial source of funding,” she noted. Specifically, Adeosun said the Mambilla hydro electric power project is estimated to gulp $18.3 billion, adding that the Federal Government will borrow N14.6 billion, while states will borrow $3.7 billion.

Another project captured in the plan is the coastal railway modernisation project (Calabar-Port Harcourt-Onne deep seaport segment) that will cost $4.8 billion. Others are the phase two of the Abuja mass rail transit service estimated at $3.5 billion; Lagos-Ibadan railway (double track), $1.6 billion; Kano-Kaduna railway (double track) $1.3 billion.

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For the eurobond, it is meant to address education and health care funding, as well as agriculture, economic management and statistics.

The Federal Government budget support for the bond is $4.5 billion, education and health are to gulp $3.5 billion, while $2.1 billion was earmarked for agriculture as $200 million was budgeted for economic management and statistics. Recall that the Debt Management Office (DMO) recently held an international roadshow over plans by Nigeria to raise $1 billion on the eurobond market in its efforts to buffer the 2016 budget deficit, which stood at N6.1 trillion.

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