Kwara explains N23 billion bond

Stephen Oni,Ilorin

The Kwara state government has shed more light on the N23 billion bond it plans to access from the Capital Market for the execution of capital projects. The bond, it explained, would enable the state to save a sum of N500 million every month.

The state Finance Commissioner, Demola Banu, while explaining the necessity of the bond to journalists, said the monthly savings will enable the state embark on more capital projects.

“The N17 billion bond that the state government obtained from the Capital Market in 2009 will be fully repaid in August this year. There was an initial proposal of N30 billion which was reduced to N23 billion. We have an existing loan that will amount to N7.5 billion by July this year.

“This is not part of the N17 billion loan we got from a commercial bank. The N7.5 billion from the commercial bank will be refinanced from the proposed N23 billion ; that means we are going to use just N15.5 billion for all ongoing and new projects. The proposed bond whose interest rate will not exceed 15 per cent will enable the state government to have access to more funds.

Banu noted that: “Meanwhile, the average interest rate of the commercial bank is about 23 or 24 per cent. In commercial banks the tenure is usually not more than one year, by the time we spread the N7.5 billion of the existing loan to about seven years the state will be saving about N500 million every month. The savings will enable the state government execute other projects in the state.

“Some will ask, why will the state government take a bond for projects it knows it will not complete? We have to realise that there are so many sources of revenue for the state. There is the Internally Generated Revenue (IGR), excess crude account and other sources.

“The bond is taken to complement whatever projects we want to embark upon. The state government will not abandon any project. This is a very transparent and credible government and we have plans for everything we are embarking upon.

“In the first phase of the bond (2013 to 2016) the state will embark on a comprehensive renovation of 120 public schools across the three senatorial districts. The renovation of those schools will cost the state a sum of N40.8 billion.

“The state has infrastructural gap of between N255 and N300 billion, meaning that every year the state must spend about N40 billion to block the gap.”

Also at the press briefing were Works and Transport Commissioner, Dr Abubakar Kannike, Senior Special Assistants to Governor AbdulFatah Ahmed on Investment and Media and Communications, Abayomi Ogunsola and Dr Muideen Akorede as well as the governor’s chief press secretary, Abdulwahab Oba.