The Oyo State House of Assembly has approved a N100bn loan facility from United Bank for Africa Plc to accelerate ongoing infrastructure projects and fund other development initiatives across the state’s 33 local government areas.
The approval followed a request by Governor Seyi Makinde in a letter addressed to the Speaker, Adebo Ogundoyin, and read during plenary on Wednesday.
The proposed financing arrangement also includes a N300bn facility to refinance an existing contractors’ finance facility obtained by the state government from Access Bank.
During deliberations, the lawmakers said the arrangement would reduce borrowing costs, consolidate the state’s contractors’ finance obligations with one financial institution and support the delivery of infrastructure projects.
They said, “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 would provide the refinancing facility at an interest rate of 22 per cent, representing a four-percentage-point reduction from the existing rate.
The refinancing is expected to ease the state’s financing burden and consolidate its contractors’ finance operations with UBA, subject to the agreed terms and conditions.
On the separate N100bn loan, the lawmakers said, “The separate N100 billion loan facility will be deployed to fund other critical infrastructure projects, to accelerate the completion of ongoing projects and sustain the administration’s infrastructure development programme.”
The N100bn facility carries an interest rate of 22 per cent, subject to review in line with prevailing money market conditions, and a repayment period of 48 months.
Its terms also include a management fee of 0.25 per cent per annum on the outstanding amount and an annual advisory fee of 0.5 per cent on the outstanding balance.
The arrangement provides for a three-month moratorium on repayment of both principal and interest. Interest accruing during the moratorium is to be repaid alongside the fourth, fifth and sixth loan instalments, respectively.
Contributing to the debate, the Deputy Speaker, Abiodun Fadeyi, alongside Gabriel Adebayo, representing Ibadan North II; Olorunpoto Rahman, representing Oyo East/Oyo West; and Sunkanmi Babalola, stressed the importance of sustained infrastructure investment in promoting development across the state.
The lawmakers cited projects such as the Ladoke Akintola University Teaching Hospital in Oyo town, the Rashidi Ladoja Circular Road and the Ido-Eruwa Road as examples of ongoing initiatives whose timely completion could improve connectivity, access to public services and economic activity.
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 N100bn facility is expected to provide additional funding for infrastructure development, while the N300bn refinancing arrangement would allow the state to transfer its existing contractors’ finance facility from Access Bank to UBA at a lower interest rate.
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