The Enugu State House of Assembly has approved a request by the Governor Peter Mbah to source for a N170 billion loan to fund capital projects in the state.
The 24-member assembly unanimously approved the governor’s request on Monday.
The lawmakers said the loan would enable the government to deliver on its mandate especially on provision of infrastructure necessary to attract investments in the state.
The assembly added that the loan would run its course in the first tenure of the governor.
Breakdown
The approval was in response to a request from the governor through a letter by the Secretary to the State Government (SSG), Chidiebere Onyia, on Monday.
Mr Onyia, a professor, addressed the letter, dated 9 October, to the Speaker of the Assembly, Uchenna Ugwu.
The SSG explained that the loan request followed an approval by the Enugu State Executive Council of the offer of N100 billion bank guarantee, N10 billion term loan and N10 billion overdraft facility from Fidelity Bank and N50 billion credit facility from Globus Bank.
He said the N100 billion bank facility will guarantee payment for contracts issued to approved contractors.
“The loan will be repaid via Irrevocable Standing Payment Order (ISPO) on consolidated Enugu State Internally Generated Revenue (IGR) accounts, which would be domiciled in Fidelity Bank and domiciliation of JAAC/FAAC/Infrastructure Support.
“The N10 billion term loan is on a tenure of 48 months, and a monthly repayment via ISPO on consolidated Enugu State IGR accounts, which will be domiciled in Fidelity Bank and domiciliation of JAAC/FAAC/Infrastructure Support. It will be used for infrastructural development,” Mr Onyia said.
Continuing, he said, “The N10 billion overdraft facility will be used for prompt payment of recurrent expenditures such as salaries and has a tenure of 12 months with monthly clean up and repayment via ISPO on consolidated Enugu State IGR accounts, which will be domiciled in Fidelity Bank and domiciliation of JAAC/FAAC/Infrastructure Support.
“The N50 billion credit facility is for the refinancing of the outstanding receivables from Enugu State Government and the repayment plan is 42 months equal and consecutive monthly repayment of principal and interest, which will be debited from Enugu State FAAC account with Globus Bank PLC.”
Concern over rising debt burden
There are concerns over the state’s rising debt burden.
Enugu’s domestic debt jumped from N91 billion (N91,856,182,849.75) in December 2022 to N93 billion (N93,197,207, 627.57) in the second quarter of 2023, various data showed.
Also, the state’s external debt stock slightly dropped from $120 million ($120,855,747.39) in December 2022 to $120 million ($120,667,083.51) in the second quarter of 2023.