THE Minister of Finance, Dr. Shamsudeen Imam yesterday allayed fears about borrowing money from international donor agencies saying that sceptics ought to be more concerned with the manner of application of such loans.

He also disclosed that the total World Bank loan portfolio in Nigeria has risen to $3.5billion arising from loans collected from the world body from 1999 till date.

Speaking at the signing ceremony of a $750million loan agreement with the World Bank in his office yesterday, he said that "in principle, there is really nothing wrong with borrowing. It is the kind of loan that you take, the terms of the loan and the way that you utilize it."

He said it was wrong to assume that Nigeria was securing a fresh loan of $3billion that would make the country indebted afresh to world bodies saying that most of the loans sourced by the country did not belong to the Federal Government but were meant for the implementation of projects by states and local governments.

Dr. Usman explained that what was misconstrued as a $3billion fresh loan was a statement by the World Bank which he said had offered Nigeria a line of credit worth $1.1billion per annum which the country might not necessarily access.

"The yearly allocation to Nigeria in 2008...the annual allocation is $750m. The World Bank says Nigeria, for the next three years instead of the $750m per annum which we have been giving you as a line which you can take or not take, we will increase it to about $1.1b per annum over the next three years. There is no $3b loan," he explained.

He added that "the total commitment of the World Bank on these three projects that we signed today is $780m. The total World Bank Portfolio in Nigeria as at today November 24 comes to $3.5b including loans that have been taken as far back as 1999."

The financing agreements signed with the World Bank yesterday included the Community and Social Development Project (CSDP) worth $200million, the Third National Fadama Development Project (NFDP-III) worth $450million and Federal Roads Development Projects costing $330million.

The minister further explained that the objective of the CSDP was to increase access by poor people to improved social and physical infrastructure and service saying that the project would support the empowerment of communities to develop, implement and monitor social infrastructure projects including natural resources management interventions and social risk management.

He listed the states to benefit from the project to include Adamawa, Bauchi, Bayelsa, Benue, Cross River, Ebonyi, Edo, Ekiti, Enugu, Gombe, Imo, Katsina, Kogi, Kwara, Nasarawa, Niger, Ogun, Oyo, Plateau, Taraba, Yobe, Zamfara and the Federal Capital Territory (FCT).

Out of the $450million cost, the IDA would contribute $250million credit while the balance would be contributed by the Federal Government ($23million), state governments ($77million), local governments ($60million), the Global Environment Facility ($7million) and 20% contributions would be made by benefitting communities in kind.

Dr. Usman also stated that the objective of the Road Development Project was to reduce passenger travel time and vehicle operating costs on targeted Federal roads as well as assist the Federal Government to manage the country's assets in a sustainable manner.

Also speaking at the ceremony, the Country Representative of the World Bank, Mr. Onoh Rohl disclosed that the bank was adopting a new approach which would ensure that maintenance of the road projects for a particular duration became part of the agreement with the contractors.

According to him, "the kinds of roads that are going to be fixed under the Federal road are the kind of roads that carry a lot of goods and people and are very important for Nigerian economy.

What is interesting about the Federal road project is that as soon as Mr. President and the Federal Ministry of Transportation embarked on a strategy of pursuing a Private public Partnership (PPA) for the most travelled roads, we successfully discussed using the World Bank money for those roads that are more appropriately financed from public resources because they would not be as viable as PPP.

"Learning from the past, we are changing the sort of contract that we would engage in. We will no longer pay contractors for just pouring concrete or asphalt.

We will pay them for keeping the roads working at an agreed standard for a long duration of time so that the maintenance is part of the bill. It is extremely important because it would be a new approach to how to finance roads in Nigeria and will deliver more sustainable results in this very important sector," he said.

On the Fadama III Project, the World Bank Representative hoped that the project would impact "the lives 2.2million Nigerian households which is roughly 16million people which is more than 10% of all Nigerians."