LAGOS State House of Assembly has approved Governor Babajide Sanwoolu’s request for the government to assume full ownership of Lekki Concession Company (LCC) under an ambitious buy-back plan.
Created in 2006, the LCC is a special purpose vehicle set up to execute the Lekki Toll Road Concession Project. It has been privately owned up until now but Governor Sanwoolu submitted a request that the Lagos State government purchase it and earlier today, assembly members resolved to approve the request sequel to the presentation of the committee on finance report.
Members of the House had received the request from the executive on June 21 and it was subsequently committed to the committee on finance to further look into it and report its findings. In his presentation, Hon Rotimi Olowo, the committee chairman said the state would become the subsisting shareholder of LCC with a 75% stake, while the Office of Public Private Partnerships will hold the remaining 25% stake.
He added that this was a sequel to the buy-out of all the shareholding interests of the company by the state government. Hon Olowo further stated that the original $53.9m loan obligation from a private sector facility had been resolved after series of engagements between the Africa Development Bank (AfDB), the LCC and the Lagos State government.
Hon Olowo 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% of $1.12m biannual. This is against the 4.12% of $2.746m per bi-annual, therefore, giving a savings of $1.16m bi-annual or $3.24m 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 authorises the state government to issue a counter-guarantee in favour of the federal government along with an irrevocable standing payment order to deduct from the state’s statutory allocation.”
He further noted that the servicing of the loan obligations would have a maturity till August 2034. Hon Gbolahan Yishawu 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.
Hon Abiodun Tobun 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. Hon Femi Saheed added that the restructuring of the loan was an indication of the transparency in the state financing, saying it gave add-on flexibility for the additional years granted for the repayment of the loan.