The government also approved the floating of $300 million Diaspora Bonds.
The Federal Government has approved a $170 million (N27 billion) loan from the French Government to improve the provision of power in the Federal Capital Territory, FCT, Abuja.
The concessionary loan, which was sourced from the French Development Agency, has a moratorium of 7 years and an interest rate of 1.56 per cent; with repayment period of 20 years.
Explaining the modalities of the loan agreement, signed by President Goodluck Jonathan and French President Francois Hollande during the latter’s visit for the Centenary celebration, the Minister of Finance, Ngozi Okonjo-Iweala, said the loan is to assist in increasing transmission base in Abuja.
“This loan is to boost transmission in the FCT, to make sure that we keep ahead of the demands for electricity in this FCT,” she said.
“The terms include 1.56 per cent interest rate per annum, commitment charge of 0.5 per cent per annum and then a service charge of 0.25 per cent per annum payable on the amount withdrawn. The loan is for 20 years with a seven years grace period that means moratorium on payment for seven years and the rest payable over 20 years” she said.
Briefing journalists after the weekly meeting of the Executive Council of the Federation, FEC, Mrs. Okonjo-Iweala said though government had sold the Generation Companies (GenCos), and Distribution Companies (DisCos), it is still responsible for the transmission of electricity in the country.
“This (the loan) will help to boost our transmission. As you know the ministry of power has set forward an emergency transmission programme for the entire country requiring $1.9 billion and we have been able to raise $1.2 billion dollars so far of very soft credits.
“This $170million from the French development agency is part of that package. The balance of the package comes from the World she said.
The Finance Minister also noted that the project had been approved in the borrowing plan since 2010; but was shelved afterwards.
“It was shelved until we asked the French development agency to renew it and fastrack it and that is how we came to approve that today,” she said.
The Federal government has also approved the floating of diaspora bonds of $300 million, as well as Global Depository Notes.
Mrs. Okonjo-Iweala told journalists during the briefing that this will enable Nigerians abroad to invest in economic rewarding ventures especially in the infrastructure sector of the country.
According to the finance minister, the bonds were pegged at $200 million until studies showed increased interest by subscribers abroad.
She explained that “there were two things that were approved: the diaspora bond and the N80 billion what we call Global Depository Notes.”
“The size of the bond will be anywhere from $100-$300 million and the idea is to have them invest this in infrastructure basically in the country. So it will be in an infrastructure that most of them can see and feel and that is what many of them in our soundings from the diaspora abroad have said they will like to invest in this.
“Now we are asking for approval to appoint all the consultants and the transaction parties as we call them who will be able to assist us on this bond,” she said.
She noted that only two countries, India and Israel, have successfully floated a diaspora bond.
Mrs. Okonjo-Iweala explained that the N80 billion Global Depository Notes was part of the federal government’s regular borrowing programme for this year.
“So we are not adding anything to it. Out of the N522 billion we said we will borrow this year to help finance the budget, we are saying N80billion we are going to float it in something called Global Depository Notes.
“This is an arrangement you make when you want to diversify and enlarge the universe of those nesting in your bonds. You work with an international bank that can issue these notes to people outside. They may be foreign investors who want to invest in Nigeria but their laws do not allow them to invest directly in another domestic currency. What they do is working with these international bank, the international bank can arrange to have them facilitate the investment in our own naira by issuing this notes which they can then invest in and purchase”.
She said the Federal Government will work with several international organizations including Goldman Sachs and Arnold and Port, as well as Nigerian companies including Stanbic IBTC, Olaniwo and Ajayi, Banwo and Ighodalo, for the project.
In his briefing, the Information Minister, Labaran Maku, said FEC expressed satisfaction with the Centenary Celebrations that climaxed last weekend and commended the President for his vision. He said the FEC also congratulated Nigerians for the ‘massive participation’ during the centenary celebrations.
Speaking on the security situation along Nigeria’s borders, Mr. Maku said Nigeria is receiving a lot of cooperation and collaboration from the neighbouring countries on the terrorist activities.
Boko Haram insurgents in the North East have been accused of fleeing to neighbouring Niger and Cameroon after some of their attacks that have left thousands dead.