The House of Representatives on Tuesday approved President Bola Tinubu’s request to secure external loans totaling $6bn to boost the Federal Government financing of critical infrastructural projects across major sectors of the economy.
Tinubu conveyed the Federal Government’s request in two separate letters addressed to the Senate President, Godswill Akpabio and Speaker of the House of Representatives, Dr Tajudeen Abbas, which were read by both men during plenary on Tuesday.
In the first letter, the President sought the parliament’s approval to obtain a $5bn loan from First Abu Dhabi Bank to “support Federal Government Funding and Fiscal Liquidity Management.
In yet another letter, the President asked the National Assembly to approve a $1bn loan facility from the United Kingdom Export Finance for the “rehabilitation of port projects in Nigeria,” including the Lagos Port Complex and the Tin Can Island Port.
Shortly after both letters were read by Mr. Abbas, the requests were referred to the Committee on Aids, Loans and Debts Management, chaired by Abubakar Nalaraba.
The House thereafter dissolved into the Committee of Supply to consider the report.
Speaking on the substance of the request, Nalaraba who represents Awe/Doma/Keana Federal Constituency, Nasarawa State said, “The House should consider the report of the Committee on Aids, Loans and Debt Management on the request for approval to establish a structured total return swap an external financing programme of $5bn with First Abu Dhabi Bank, to support Federal Government funding and fiscal liquidity management and approve recommendations therein.”
According to him, “the implementation of a total return swap transaction involving the Federal
Government of Nigeria and First Abu Dhabi Bank in aggregate principal amount of up to $5bn together with the collateralisation of the transaction by the issuance of naira-denominated FGN Securities to First Abu Dhabi Bank PJSC (FAB) as collateral for the loan of up to 133.3% of the amount drawn.”
The Committee recommended that the Federal Government of Nigeria make margining payments to First Abu Dhabi Bank PJSC in dollars upon demand if, at any time, either due to fluctuations in the market prices of the Federal Government securities or as a result of movements in exchange rate or both, the value of the collateral issued to First Abu Dhabi Bank falls below the initial value at the time of issuance.”
Another recommendation includes “that the $5bn should be drawn down in tranches, with each tranche comprising a corresponding confirmation and other ancillary agreements (as may be required) between the Federal Government of Nigeria and First Abu Dhabi Bank.
“Authorisation of the use of proceeds for budget implementation, development of key infrastructure projects, which are of priority to the administration, repayment of relatively more expensive domestic and external debts in the Federal Government of Nigeria’s public debt portfolio.”
Both loan requests were unanimously approved when the lawmakers returned to plenary from the Committee on Supply.
