Row in Senate over govt’s $7.4b loan plan

Posted by: Onyedi Ojiabor, Asst. Editor Posted date: November 08, 2012 In: Business, Featured | 

The Senate was divided yesterday over plan by the Federal Government to borrow $7.435 billion for pipeline projects.

The government seeks to obtain the loan from a consortium of banks comprising the World Bank, from which it is asking for $2.975 billion, African Development Bank, for $731.23 million, the Islamic Development Bank-$672.85 million,French Development Agency-$56.61 million and Exim Bank of China, for $3 billion.

Through the motion to mandate the Senate Committee on Local and Foreign Debts to scrutinise the proposed loan, Senators insisted that additional details justifying the items for which the loan is sought must be provided before the proposal would receive its endorsement

Senate Leader, Victor Ndoma-Egba who sponsored the motion entitled, ‘Inclusion of the Pipeline projects into the Medium Term (2012-2014) External Borrowing Plan,’ recalled that President Goodluck Jonathan, sent a communication seeking the consideration, approval and inclusion of the Pipeline Projects into the Medium Term (2012-2014) External Borrowing Plan dated 14th February, 2012.

He explained that the projects are special initiatives designed to put the economy back on track through growth and employment activities geared towards transforming the fortunes of Nigerians by the implementation of the Government’s transformation agenda.

He said the projects are at various stages of finalisation and a total external Pipeline borrowing.

However, many Senators were not comfortable with the proposed loan.

Senator Joshua Dariye in his contribution, recalled that the Minister of Finance, Mrs. Ngozi Okonjo-Iweala rescued the country from the London and Paris clubs under former President Olusegun Obasanjo, saying he is worried with the rate the country is borrowing money.

He cautioned that if care was not taken, the country would land itself into a more serious mess on account of loan.

Senator Ita Enang, said some of the items listed for the loan are unreasonable.

Enang noted that most of the items for which the loan is sought are already covered in the 2013 budget.

According to him, items like employment, roads, flood control and primary health care are already covered in the 2013 budget.

He urged the Senate to ensure that the loan is obtained at competitve interest rate to avoid a situation where high interest rate would be used to repay the loan.

He also wondered why no project was slated for Akwa Ibom in the Pipeline projects.

Also, Senator Benadict Ayade opposed the loan in its entirety.

Ayade wondered why the loan should be taken when there is nothing to show for loans obtained in the past.

Besides, he said it is more likely that the loan would end up in the pockets of some fat cats in the country.

He cited the example of his Cross River North constituency where a water project worth N500 million was said to have been awarded and paid for, stating that no project of that description was executed in his constituency.

At that point, the Senate President, David Mark, promised to take up the issue.

But Senator Ayogu Eze supported the loan, wondered however why no provision was made for the development of water ways.

Eze said the roads would continue to be bad even when fixed if alternative means of transporting goods was not created.

Mark said the issues raised by Senators would be addressed by the committee, adding that only names of states that applied for loan appeared in the document.

SOURCE: 8 November 2012.