The Delta State House of Assembly has approved Governor Ifeanyi Okowa’s request for an N100 billion credit facility.
The N100 billion loan approval which is coming barely 4 months to the tenure of the current administration, is part of the N150 billion earlier approved Consolidated Syndicated Loan.
The loan approval followed the adoption of a motion moved by the Majority Leader of the Assembly, Hon. Ferguson Onwo, and seconded by the member representing Ughelli North I constituency, Mr. Charles Oniyere at the Assembly’s plenary in Asaba on Thursday.
The Governor had transmitted a letter for the N100 billion loan request to the lawmakers through the Speaker, Hon. Sheriff Oborevwori duly presented the same to the House.
Assembly’s approval required by the new lead arranger
Oborevwori, who is the state’s 2023 Governorship Candidate of the Peoples Democratic Party (PDP), noted that the assembly had on April 26, 2022, received and had subsequently approved the governor’s request of N150 billion consolidated syndicated loan from Zenith Bank.
- Okowa said in the letter, “With the change of Lead Arranger from Zenith Bank to Premium Trust Bank Limited, alongside other participating banks willing to accede to the pricing terms and further documentations, Premium Trust Bank Limited has insisted that in line with the prudential guidelines and extant regulations, a House of Assembly’s resolution was required to enable the bank to consummate the transaction.
- ”Consequent on this, the State Executive Council at its first meeting held on Monday, January 16, 2023, considered and approved for the state government to obtain N100 billion out of the earlier approved N150 billion consolidated syndicated loan led by Premium Trust Bank Limited in line with the reverse terms and conditions.”
The governor explained that the loan will be used for the payment of contractors and funding of various crucial ongoing projects across the state.
House approves another N2 billion loan request
In a related development, the House of Assembly also approved another request by the governor for an N2 billion bank facility to fund an additional investment of 3% equity in the UTM Offshore Limited Floating Liquefied Natural Gas (FLNG) Project.
This similarly followed the adoption of a motion moved by the Majority Leader of the Assembly, Hon Onwo and seconded by the Minority Leader, Hon Innocent Anidi.
- Okowa in the letter written to the House said, “I wish to state that in order to further diversify the economic base of the state and take advantage of the increased demand for natural gas in Europe and other parts of the world due to the shortfall in the supply as a result of the Russian-Ukrainian war.
- ”UTM Offshore Limited, which in the first instance offered 5 (five) percent equity shares to Delta State under a term loan facility from Fidelity Bank, has offered additional 5 (five) percent equity to the state.
- ”In view of the bank’s commitment to partner with the state government on this investment with an offer of N20 billion loan facility. The State Executive Council at its first meeting held on Monday, Jan. 16 considered and approved for the state government to accept the offer by Fidelity Bank Plc.
- “The terms and conditions for the loan include; an interest rate of 21 percent per annum, management fees of one percent flat, three years tenure of payment, and facility amount of N20 billion.
- ”Also, the facility is to be secured by the issuance of an Irrevocable Standing Payment Order (ISPO) authorizing the Accountant General of the Federation to deduct from the State FAAC allocation monthly.”
In case you missed it
- Recall that in April 2022, the Delta State House of Assembly approved the request of the State Governor, Ifeanyi Okowa, to borrow the sum of N150 billion in favour of the state government.
- Okowa said the requested credit facility which then had Zenith Bank PLC as the “lead arranger, would be principally used to settle the arrears of unpaid certificates earned by contractors with respect to the completion of some critical ongoing legacy projects awarded by past and present administrations in the state.
- The governor also said that part of the loan would be used to take care of outstanding pension commitments to the state and local government areas pensions in the contributory pension scheme, amounting to N20 billion and N10 billion respectively.
This is a despicable approval. The exit of Zenith Bank is a red flag. The state mismanaged bond issuance of the same amount in the past. Hence, it’s decision to shy away from the regulatory scrutiny of the bond market and rating. This is a banana pill for the incoming administration in the state. Delta state.is heavily indebted though with lots of potentials but successive administrations had been too greedy pursuing personal interests at the expense of the growth of the state.
Who are those behind UTM offshore?
If the state borrows to pay outstanding pensions then what sustainable measures are in place to prevent future build ups. That is governance not this yoyo administration.
Governor Okowa is a criminal, he has robe the people of Delta and contribute to hardship. I pity Nigeria if they have him as Vice President.