The Lagos House of Assembly has approved the request of the Lagos State Governor, Babajide Sanwo-Olu, for the state to assume full ownership of Lekki Concession Company (LCC) Ltd, a privately-owned company.
The approval of the house follows the receipt of the request from the Executive on June 21, which was subsequently committed to the committee on finance for deliberation and the presentation of the committee’s report during plenary session on Monday.
According to NAN, the committee’s Chairman, Mr Rotimi Olowo (Somolu I), in his presentation, said the state would become the subsisting shareholders of LCC with 75% shareholding and the Office of Public Private Partnerships, shareholding of 25%, respectively.
Olowu said that the approval of the house follows the buy-out of all the shareholding interests of the company by the state government.
What the Lagos House Committee Chairman is saying
Olowo said the original $53.9 million loan obligation from a private sector facility had been resolved after series of engagement between Africa Development Bank (AfDB), the company and the state government.
He said, “The agreement was to convert the loan to a public sector facility with the benefit of a considerable reduction in interest charges of 1.02 per cent of $1.12 million biannual.
“This is against the 4.12 per cent of $2.746 million per bi-annual, therefore, giving a savings of $1.16 million bi-annual or $3.24milliom per annum.
“The House, therefore, granted the executive the approval to convert the AFDB loan to the public sector loan backed up by sovereign Federal Government guarantee on behalf of the state government.
“This also authorise the state government to issue a counter guarantee in favour of the Federal Government along with an Irrevocable Standing Payment Order (ISPO) to deduct from the state’s statutory allocation.”
Olowo noted that the servicing of the loan obligations would have a maturity till August 2034.
During the debate of the report before the approval, Mr Gbolahan Yishawu (Eti-Osa II) supported the committee’s recommendation, saying it was a smart move as the interest rate would not injure what the state was spending on capital expenditure.
Yishawu added that it would also reduce the interest risk as well as the rate by moving the loan from private to public sector.
Mr Abiodun Tobun (Epe I) said the saving of 3.1% in interest rate difference would reduce the burden on the state government and encourage the savings to be used to develop other sectors.
The Speaker of the House, Mr Mudashiru Obasa, thereafter, directed the Acting Clerk of the House, Mr Olalekan Onafeko, to send a clean copy of the resolution of the House to the governor.
What you should know
The Lekki Concession Company is a Special Purpose Vehicle set up to execute the Lekki Toll Road Concession Project and the operations of the Lekki Ikoyi Link Bridge. It is a public-private partnership (PPP) scheme and uses the Build-Operate-Transfer (BOT) model of Infrastructure delivery. LCC’s mission is to provide high-quality road infrastructure and related services along the Lekki, Lagos, Nigeria.