Oyo State to borrow N100 bln via bond issuance to fund road projects
The Oyo State Government plans to borrow N100 billion through the issuance of bonds to facilitate execution of what it described as “priority projects” that will further drive economic development in the state.
According to the state cabinet, which gave the approval on Tuesday, the bonds will be issued in two tranches of N50 billion each for the construction of the 50 kilometres Iseyin-Ogbomoso road, the Ibadan Circular Ring-Road and Ibadan Airport upgrade.
Proceeds from the debt issuance, the government said will also be used for the development of Ibadan Dry Port and rail corridor that would serve as economic hubs of the state.
The state commissioner for information, Wasiu Olatubosun said the state will also construct and equip with modern facilities, one government hospital in each of the three senatorial districts of the state from the fund.
He said the 21 kilometre Airport – Ajia – New Ife Express Road with a spur to Amuloko, Ibadan would also benefit from the alternative project funding approach of the state government.
The commissioner said the Ajia-New Ife express Road will be executed by Messrs Peculiar Ultimate Concerns Ltd at a total cost of N8.5 billion, with an agreement that the project funding would be in form of Alternative Project Funding Approach (APFA).
Olatubosun said this process was to allow the state to collaborate with the private sector and institute a form of Public-Private Partnership for funding of infrastructural projects in the state.
“With this approach in place, there will be transfer of projects’ risk to private entity while the hassle of Debt Management Office (DMO) approval would be avoided and the quality delivery, as well as quick completion of projects, would be ascertained,” the Commissioner added.
Nigeria has been struggling with dwindling revenue due to sharp drop in oil prices and has resorted to borrowing from both domestic and external sources to finance its fiscal expenditures.
State governments also depend largely on revenue sharing from a central account where earnings from crude oil exports are deposited for allocations to the three tiers of government in the country.
Revenue distributions have continued to dwindle due to the drop in income from crude oil exports, while internally generated revenue has also been affected by the impact of lockdown imposed in the wake of coronavirus outbreak by the governments