Buhari Seeks Senate’s Approval for Fresh $5.5 Billion Loan
President Muhammadu Buhari has asked the National Assembly to approve two external loans worth $5.5 billion, The Guardian reports. But the terms and conditions for such facilities are not made known. According to Buhari in a letter read by Senate President, Bukola Saraki, during a plenary session yesterday, the first loan of $2.5 billion is for the financing of the deficit and capital projects in the 2017 budget. The second loan of $3.0 billion is for the refinancing of maturing domestic debt obligations through the issuance of Eurobonds or a loan syndication.
The president informed the legislators that the terms and conditions of the loans would only be known when they are ready for collection.“With respect to the terms and conditions of the proposed external borrowings, the Senate may wish to note that being market-based transactions, the terms and conditions of the borrowings can only be determined at the point of issuance of finalisation based on prevailing market conditions in the International Capital Market (l.C.M.),” he declared.
The request generated an initial controversy on the floor of the Senate as the lawmakers protested against the earlier impression that the request had been pending before the Senate and that its delay in approving it had caused a major hitch in the implementation of the budget.
Justifying his loan request of $2.5 billion, President Buhari invited the Senate to “note that in order to implement the external borrowing approved by the National Assembly in the 2017 Appropriation Act, the Federal Government issued a $300 million Diaspora Bond in the International Capital Market (ICM) in June 2017. The balance of the 2017 external borrowing, in the sum $3.2 billion is planned to be partially sourced from issuance in the ICM of $2.5 billion through Eurobonds or a combination of Eurobonds and Diaspora Bonds, while $700 million is proposed to be raised from multilateral sources.
“It should be noted that the intention is to issue the Eurobonds first, with the objective of raising all the funds through Eurobonds, and that Diaspora Bonds will only be issued where the full amount cannot be raised through Eurobonds.”
He listed the projects as the Mambilla Hydropower Project; construction of a second runway at the Nnamdi Azikiwe International Airport; counterpart funding for rail projects and the construction of the Bode-Bonny Road, with a bridge across the Opobo Channel.”
On the $3 billion for the re-financing of domestic debts, the president said: “In addition to the implementation of the external borrowing approved in the 2017 Appropriation Act, in order to reduce debt service levels and lengthen the tenor profile of the debt stock, the Federal Government seeks to substitute maturing domestic debt with less expensive long-term external debt.”
According to him, the Federal Government plans to source $3.0 billion through the issuance of Eurobonds as approved by the Federal Executive Council at its meeting of August 9, 2017. Listing what he believed could be the benefits of the loan, Buhari stated that the proposed re-financing of domestic debt through external debt would achieve more stability in the debt stock while also creating more borrowing space in the domestic market for the private sector.
He drew the attention of the Senate to the fact that in the 2017 Appropriation Act, debt service at N1.663 trillion represents 32.73 per cent of the government’s total expenditure, which makes it important to take urgent steps to reduce debt service costs.
At another forum yesterday, Buhari announced that funds recovered from treasury looters would be deployed into the financing of the budget. It was, however, not clear if the National Assembly has given approval for the use of the funds, but President Buhari who made the announcement in Abuja said the decision on that had been taken.
Buhari, who spoke at the 22nd Annual Conference of Certified National Accountants under the auspices of the Association of National Accountants of Nigeria (ANAN) said his administration was aiming at 10,000 megawatts power generation by 2020, stressing that “power generation has peaked to an all-time high of 7,001 megawatts in the third quarter of 2017.”
Represented by the Accountant-General of the Federation, Alhaji Ahmed Idris, Buhari expressed happiness that “a firm implementation of the Treasury Single Account (TSA) since September 2015 has significantly enhanced transparency in the Federal Government’s Public Financial Management System.”
Also yesterday, the Senate passed the N152 billion 2017 budget of the Federal Inland Revenue Service (FIRS).Approving the report of its Committee on Finance, the Senate approved N75.8 billion as personnel cost indicating 49.58 percent, N46 billion for overhead indicating 30.09 percent and N31 billion indicating 20.33 percent.
The personnel budget of the agency increased from N51.8 billion in 2016, to N75.8 billion. “This is due to the planned recruitment of 700 additional staff in 2017 and salary review by 30 per cent subject to approval by Salary, Wages and Income Commission,” the report read.The FIRS has projected revenue of N4.9 trillion in its 2017 budget.
The lawmakers also approved N270.5billion 2017 budget of the Nigeria Ports Authority (NPA) which has a projected revenue of N288.7billion in the same year.This is in addition to the approval of a N161.9 billion for the Nigerian Maritime Administration and Safety Agency (NIMASA) with a projected revenue of N161.9 billion.
Saraki said it was necessary for revenue generating agencies to live up to their mandates.This, he said, would reduce the need for borrowing by the Federal Government, adding that the Senate would do its part to ensure that the agencies live up to expectations. He also expressed concerns about the extra-budgetary expenditures made by some revenue generating agencies.
But the lawmakers put on hold the 2017 capital budget expenditure of the National Automotive Design and Development Council over allegation of irregularities.They threatened to arrest the council’s Director-General, Alhaji Aminu Jalal, for allegedly evading briefing the committee on trade and investment on the budget performance.
This legislative decision was taken sequel to the report submitted by Sam Egwu, the chairman, Committee on Trade and Investment where he reported that the agency failed to credibly state its budget performance for 2017.
Saraki said the DG should stop further expenditure on the 2017 capital budget until he clears with the committee, but to continue to spend the recurrent expenditure for staff salaries.
In the House of Representatives, the Ad hoc Committee Investigating Revenue Leakages in the Department of Petroleum Resources (DPR) and other subsidiaries of the Nigerian National Petroleum Corporation (NNPC) has begun the scrutiny of Duke Oil and its alleged non-remittance of over N6 trillion revenue. Duke Oil, it was learnt, is a subsidiary of NNPC.
Addressing members of the committee yesterday, the panel chairman, Jarigbe Agom Jarigbe (PDP, Cross River), stated that the probe would cover January 2016 to 2017 and would be predicated on the apparent inability of the DPR to enforce compliance with remittances into the Consolidated Revenue Fund (CRF).
The committee also resolved to, among other things, ascertain the actual quantity of crude lifted by Duke Oil, number of special products such as fuel oil (LPFO), naphtha, condensate, liquid natural gas, pentane plus and liquefied petroleum gas (LPG) on which they are supposed to pay royalties.
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