The Oyo State House of Assembly, has approved a N100 billion loan facility from United Bank for Africa Plc to accelerate the completion of ongoing infrastructure projects and fund other critical developmental initiatives across the 33 Local Government Areas of the state.
The approval followed a request by Governor Seyi Makinde, conveyed in a letter addressed to the Speaker of the House, Adebo Ogundoyin, and read during plenary, on Wednesday.
The N100 billion loan is intended to provide additional funding for critical infrastructure development and facilitate the timely completion of ongoing projects across the state, while the accompanying N300 billion facility would be used to refinance an existing contractors’ finance facility obtained from Access Bank.
The lawmakers, during deliberations on the request,
said, “The financing arrangement would enable the State Government to reduce its borrowing costs, consolidate its contractors’ finance obligations with one financial institution and strengthen its capacity to deliver infrastructure projects.
“The N300 billion component is designed to facilitate the takeover by UBA of the existing contractors’ finance facility, which the state government had accessed through Access Bank at an interest rate of 26 per cent.”
Under the proposed arrangement, UBA will provide the refinancing facility at an interest rate of 22 per cent, representing a four-percentage-point reduction in the interest rate on the existing loan.
The refinancing arrangement is expected to ease the state government’s financing burden and enable it to concentrate its contractors’ finance facility operations with UBA, subject to the agreed terms and conditions.
The lawmakers said, “The separate N100 billion loan facility will be deployed to fund other critical infrastructure projects, with the objective of accelerating the completion of ongoing projects and sustaining the administration’s infrastructure development programme.”
The facility carries an interest rate of 22 per cent, subject to review in line with prevailing money market conditions, and a tenor of 48 months.
The terms also provide for a management fee of 0.25 per cent per annum on the outstanding amount and an advisory fee of 0.5 per cent annually on the outstanding balance.
The financing arrangement includes a three-month moratorium on the repayment of both principal and interest. Interest accruing during the moratorium period is to be repaid alongside the fourth, fifth and sixth loan repayments, respectively.
Contributing to the deliberations, the Deputy Speaker of the House, Abiodun Fadeyi, alongside Gabriel Adebayo (Ibadan North II), Olorunpoto Rahman (Oyo East/Oyo West) and Sunkanmi Babalola, highlighted the importance of sustained infrastructure investment in creating lasting developmental legacies for the state.
The lawmakers referenced major projects, including “the Ladoke Akintola University Teaching Hospital in Oyo town, the Rashidi Ladoja Circular Road and the Ido-Eruwa Road, among other ongoing infrastructure initiatives,” as examples of projects whose timely completion would contribute to economic growth, improved connectivity and better access to public services.
They said, “Completing ongoing projects would ensure that investments already made translated into tangible benefits for residents, while sustained infrastructure development would generate employment opportunities, stimulate commercial activities and improve the movement of people, goods and services across the state.”
With the Assembly’s approval, the N100 billion loan is expected to provide additional resources for critical infrastructure development, while the N300 billion refinancing arrangement will enable the government to transfer its existing contractors’ finance facility from Access Bank to UBA at a lower interest rate.