The Senate Wednesday approved the request of 15 states and the Power Holding Company of Nigeria to borrow $1.137 billion from the Islamic Development Bank (IDB), the International Development Association (IDA), French Development Agency (FDA) and Indian Line of Credit.

The benefiting states include Lagos, Abia, Oyo, Imo, Taraba, Plateau, Osun, Adamawa and Edo. Others include Kebbi, Niger, and Ondo.

Cross River and Enugu States got partial approvals for their requests because of some discrepancies between their requested amount and that approved by the Federal Ministry of Finance.

This approval followed the acceptance of the recommendation of the Senate Joint Committee on Finance, and National Planning, Economic Affairs and Poverty Alleviation that appraised the loan requests in the final batch of the 2010 external borrowing plan.

The upper house however rejected the requests of three other states - Ogun, Kaduna and Kano - to borrow from the foreign financial institutions to finance some of their projects.

The loan amounts will be applied to power and energy projects, rural access and mobility projects, special intervention for infrastructural developments in some states and social programme developments in others.

The Senate had, late last year, approved the second batch of the 2010 external borrowing plan in which it excluded the states but approved the federal government's request to borrow $1.537 billion out of the overall $3.702 billion, which President Goodluck Jonathan had repeatedly requested.

The first approval was in April 2010 when the lawmakers partially approved $915 million out of the $5.22 billion loan amount proposed under the 2010 borrowing plan, leaving out $4.31 billion.

Presenting the Committee's report, its Chairman, Senator Ahmed Makarfi (PDP, Kaduna), who is a former governor of Kaduna State, said the state was denied approval because it was yet to finish negotiations with the lending agencies.

On its part, Ogun was excluded from the loans approval following its inability to reconcile its requested loan amount with that approved by the Federal Ministry of Finance.

According to the Committee chairman, Kano State's request was turned down because it refused to show up at the National Assembly to defend the request.

While the Senate approved the request of the Federal Government to get a loan of $152 million for its power/energy project from the Africa Development Bank (ADB), it approved $68 million loan facility for Oyo State for its urban water and sanitation project.

For its rural access mobility project, the Senate also approved $60 million for Niger State; It okayed $15 million for Taraba State's water supply; $60 million for Imo State's rural access mobility project, and $50 million for Kebbi State's special intervention for infrastructural development project.

It also approved $50 million for growth enterprise and market in states and power/energy project, $50 million for Edo State's special intervention for infrastructural development project and $100 million for Enugu State's rural access and mobility and power/energy projects.

The Senate also approved $333.8 million for Lagos State's budget support, urban transport and water sector reform projects.

To fund special intervention for infrastructural development projects, the Senate also approved $200 million for Abia State, $50 million for Adamawa State, $50 million for Ondo State and $50 million for Plateau State.

It also gave its nod to Osun State to borrow $60 million for its rural access and mobility project II.

The outstanding 2010 external borrowing plan is made up of 12 projects, eight of which belong to 16 states, three for the federal government and the remaining is shared between the states and federal government.

Makarfi said the approved borrowings have met the new external borrowing guidelines.

"They all have more than 35 per cent concession as required by the borrowing guidelines," he said, adding, "This is a total departure from the previous external debt pattern, when Nigeria was borrowing under severe and unfavourable terms and condition from the international capital market".

He added, "About 75 per cent of the loans attract an interest rate of 0.7 per cent per annum, while the remaining 25 per cent attract an interest charge not exceeding 2 per cent per annum."

The loans and credits would be secured on concessionary terms with repayment periods of 25 to 40 years and moratorium of 7 to 10 years.
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