The Senate has approved Bola Tinubu’s $500 million loan request for the Bureau of Public Enterprises (BPE) to enhance the metering of citizens, aimed at improving the financial and technical performance of electricity distribution companies.
The World Bank loan is part of Nigeria’s Distribution Sector Recovery Program (DISREP) and amounts to $500 million.
The approval came yesterday following the consideration of the report presented by the Senate Committee on Local and Foreign Debts, led by Senator Aliyu Wammako (APC, Sokoto North), regarding the 2022–2024 External Borrowing (Rolling) Plan for the Bureau of Public Enterprises (BPE).
Presenting the report, Vice Chairman of the Committee, Senator Haruna Manu (PDP, Taraba Central), stated that the Senate should receive and consider the Committee’s report on the 2022–2024 External Borrowing (Rolling) Plan for the BPE.
He said, “That the Senate do approve the sum of $500,000,000 (Five Hundred Million United States Dollars) in the ongoing negotiation of External Borrowing for Bureau of Public Enterprise (BPE).
The $500 million loan is part of the $7.94 billion loan request that President Bola Tinubu submitted to the Senate for approval on November 1, 2023, under the 2022-2024 external borrowing plan. The President also requested approval for €100 million.
However, during a special plenary on December 30, the Senate approved $7.4 billion of the requested amount after reviewing the report from the Committee on Local and Foreign Debt.
Senator Haruna Manu emphasized that the terms and conditions of the loan would not compromise Nigeria’s economic sustainability, integrity, or independence as a sovereign nation.
Presenting the report, Manu said that “The Senate of the Federal Republic of Nigeria will recall that at the Plenary on November 1st 2023 a communication from Mr. President requesting for the approval of Federal Government 2022 – 2024 External Borrowing Plan was read.
“The External Borrowing (Rolling) Plan contain a request for approval of $7,944,508,559.00 and Euro 100,000.000 as grant component.
“The communication and the attached scheduled was referred to the Committee on Local and Foreign Debt for further legislative action.
“A report (No.1) of this Committee recommending the approval of $7,444,508,559.00 and £100,000,000.00 out of the proposed total facility of $7,944,508,559.00 was laid before the Senate and was considered on 30th December, 2023.
“The Committee deferred consideration on the proposed project and amount for Bureau of Public Enterprises due to the agency’s failure to appear before the committee to defend the proposed project for their agency as captured in the External Borrowing Plan.
“Following the resumption of the Committee’s consideration of the outstanding request, and after legislative interactions, deliberations, and due diligences, the committee hereby submit its report and sought for the approval of the recommendation therein.
“The request of Mr. President is in compliance with the provisions of the Debt Management Office (Establishment) Act 2003 (DMO) and the Fiscal Responsibility Act 2007 (FRA) which both enjoin the President to seek and obtain the approval of the National Assembly in respect and also obligates the National Assembly to decide on the request by a resolution.
“The provisions of the above statutes together with the revised guidelines for External and Domestic Borrowing issued by the DMO pursuant to its powers under the DMO
Act, requires that all Tiers of Government of the Federation shall borrow only under the following conditions: Shall specify the purpose for which the borrowing is intended which shall only be for long term Capital Expenditure and Human Capital Development.
“Such borrowing shall be on concessional terms with low interest rate and with a reasonably long amortization period. Shall present a cost benefit analysis detailing the economic and social benefit of the purpose for which the intended borrowing will be applied.
“Shall provide satisfactory proof of the existence of prior authorization in the Appropriation Law for the purpose for which the borrowing is to be utilized. Such borrowing shall have the Approval of the relevant Executive Council.
Such borrowing must be approved by a resolution of the relevant Legislative Assembly.
The Minister of Finance, or any individual the Minister designates in writing, shall execute such external borrowing on behalf of the Federal Government.
“Financial Institutions and Development agencies are required by the above Statutes to request and obtain proof of compliance with the provisions of Part X of the Fiscal Responsibility Act before lending to any Government in the Federation.That our debt service figures constitute a huge drain on our revenue to the extent that it account for over 30% of our expenditure in the annual budget.
“That due to the shortfall in our annual revenues in relation to our need for rapid infrastructural and human capital development, we have had to pass deficit budget every year, requiring us to borrow to finance the deficit in our budget.
“That total borrowing request of $7,944,508,559 of which Mr.President is seeking approval of National Assembly is proposed to be borrowed from various financial institutions. That the program development objective of this project is to improve financial and technical performance of Electricity distributions companies.”
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