28 November 2012

Nigeria: Fashola Tackles FG Over U.S.$600 Million World Bank Loan

Lagos State Governor, Mr Babatunde Fashola, Tuesday approached the House of Representatives Committee on Loans, Aids and Debts, seeking an intervention in an alleged attempt by the Federal Government to halt a U.S.$600m loan facility the state had with the World Bank.

Fashola who met with members of the House Committee on Loans, Aids and Debts, told the lawmakers that it was improper to halt a running loan facility, particularly when the loan had been factored into the 2013 budget proposal of the state.

In a petition presented to the House Committee Tuesday, the governor said the loan was procured on the understanding that Lagos State would access $200 million in three tranches over a period of three years, spanning from 2012 to 2014.

He however expressed surprise that after the state had accessed the first tranche, there were indications that the Federal government was no longer prepared to guarantee the loan.

Fashola, who stormed the National Assembly with his retinue of aides, was also joined in the protest by several members of the House of Representatives elected on the platform of the Action Congress of Nigeria (ACN) at the meeting.

According to Fashola, the sudden refusal to guarantee the loan could frustrate the plans of state to deploy the borrowed funds to boost its infrastructure development plans.

"We have a commitment with the World Bank for a loan of $600 million offered to Lagos. It is supposed to be in three tranches and the first tranche was paid in 2011. We were expecting the payment of the second tranche when we got the shocking information that the loan facility had been stopped.

"As I speak, we have not received any official communication from the Federal Ministry of Finance about their concerns. I know that through the telephone communication I had with the Minister of Finance, she had told me that she could not accommodate Lagos State in the 2013 borrowing plan. My plea is for the second tranche to be included in the 2013 borrowing plan and the third included in the 2014 borrowing plans," he said.

In the course of the meeting with the House Committee, some lawmakers suggested that the action of the government may have been informed by the general fears that states were bad debtors and Lagos may have problems liquidating the loans. But Fashola dismissed such fears an unfounded and cited the case of his predecessor who took a loan facility and the state paid back fully.

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