Daily Independent (Lagos)
Michael Simire
29 December 2008
Lagos State Government has disclosed that a major facelift will soon be witnessed on the busy, but dilapidated Lagos-Badagry expressway.
Governor Babatunde Fashola made the disclosure on Wednesday at the completion meeting of the state government's Debt Issuance Programme (DIP), saying that following the completion of the design reconstruction work to transform the major road into a 10-lane international highway will soon begin.
Emphasising that the new-look facility would feature pedestrian walkways, bus routes and rail lines, Fashola said government is also determined to maximise the potential of water transportation by building a network of jetties, dredging water transportation routes and partnering with the private sector to provide modern ferry services.
"Designs of designated routes for the Light Rail Mass Transit Scheme are nearing completion, in readiness to commence actual construction work on the first route. All these will be complemented by an extension of the Bus Rapid Transit (BRT) Scheme to other parts of the state," he said.
According to him, no fewer than $2 billion would be spent over the next two decades on the expansion and modernisation of the state's water supply network.
He added that the state's N1.3 billion monthly Internally Generated Revenue (IGR) seems inadequate in the light of the magnitude of emerging challenges, compelling the search for an augmentation source such as the Bond Issuance Programme that presents an opportunity for such alternative funding.
"For one, it provides an avenue by which government can immediately access much needed funds as and when required. It is also an opportunity for institutional and individual investors in the private sector to support government initiatives while earning good returns on their investment."
The governor stressed that the tax income generated by the state would constitute the core base of the DIP and obligations arising from the programme would, therefore, be serviced substantially from the state's IGR.
Essentially, the DIP entails a N275 billion five to seven-year tax-exempt Infrastructure Related Bond, in respect of which the first tranche is for N50 billion in units of N100 and at a coupon of 13 per cent, which is available in the market for purchase by individuals and corporate bodies.
Fashola said beside providing tax-exempted income to investors (through coupon payment), the financial instruments would also permit banks to include the instrument as a liquid asset in the computation of statutory liquidity requirements.
Commissioner for Finance, Rotimi Oyekan, described the bond as the first of its kind in the country and a key contributor towards achieving Nigeria's Vision 20-2020 goal of becoming a top 20 world economy by the year 2020.
He said with an estimated $150 billion required to overhaul infrastructure in Lagos State so as to enable it achieve a proper mega city status, innovative financing mechanisms are necessary.
His words: "The World Bank recently declared that a $1 billion investment in infrastructure translates to a one per cent increase in a nation's Gross Domestic product (GDP) and the Federal Government has indicated that an estimated 13 per cent year-on-year GDP growth is required to achieve the Vision 20-2020.
"Through the consequential growth that will result from the sustained infrastructure development in Lagos with the help of the funds from this new bond, our citizens will enjoy greater prosperity and lifestyle improvement and we will witness an overall reduction in poverty levels as the socio-economic environment also improves."
According to him, Lagos has already embraced the PPP Model of infrastructure delivery in bridging the infrastructure gap.
"For example, our recent success in supporting the Lekki Concession Company (LCC) to achieve financial close on a N46.4 billion ($390 million) long-term financing package on ground-breaking terms for Nigeria to finance the ongoing rehabilitation and upgrade of the Lekki-Epe Expressway demonstrates what can be achieved through involving the organised private sector in infrastructure financing and delivery.
"In this particular deal, Lagos provided a N5 billion 20-year mezzanine loan to the LCC. To an investment of only N5 billion, Lagos was able to attract private investment in 50-kilometre world-class road infrastructure at the multiple of eight times the amount invested.
"With the N275 billion of new funds that will be raised from the Infrastructure Related Bond, Lagos will be able to continue providing financial support to infrastructure development. Financing is absolutely critical to infrastructure provision."
Fashola, however, reiterated the call on individuals and corporate bodies in the state to pay taxes as and at when due.
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