The Lagos State House of Assembly on Thursday cleared the misconception in the public domain that the state government just acquired full ownership of the Lekki Concession Company (LCC).
Addressing the Assembly Correspondents in his office yesterday, Chairman, House Committee on Finance, Rotimi Olowo, representing Shomolu Constituency 1, stated that what the House of Assembly did was to grant the Governor’s request to convert the private sector loan of $53.9million granted the LCC by the Africa Development Bank and three other local banks to a public sector loan, and not to give approval for takeover of the company because the state government has already acquired the company since 2014.
Olowo noted that the clarification became necessary following reports in the media that the House granted approval for the takeover of LCC by the state government last week even when the takeover had happened seven years ago.
“We have bought over the LCC since 2014 and it is wholly owned by the state now. Shareholding is structured in such a way that the state government owns 75 percent shares, while the Public Private Partners (PPP) owns 25 percent of the shares. Don’t forget the PPP still belongs to the state government; so the LCC is now wholly owned by the Lagos State Government,” he said.
He noted that the loan was changed from being a private sector loan to a public sector loan because the interest was getting too much and becoming a burden on the state government’s purse.
“Conditions for getting private sector driven loan comes at a higher interest rate of about four percent as against that of the public sector driven loan which is about 0.8 percent and with a better gestation period of additional 15 years. And you should be mindful of the fact that the current loan is private sector and it attracts about four percent interest rate,” he stated.
Olowo said that the repayment period of the loan was based on the new ownership structure extended to 2034 so as to reduce pressure of repayment on the state government.
Olowo, who maintained that the state government owns LCC 100 percent currently, said the state government decided to take over the company because of its economic advantage. He stressed that the decision was largely informed by the need to extend infrastructure to Epe due to investments springing up around that corridor, particularly the Dangote Refinery.
“And there was a need for us to prepare the infrastructure that will attract such investments and you know it is going to be mutually beneficial. It is going to generate employment for the youths in the state and they are going to pay taxes to the state, thereby generating more money for the state,” Olowo said.
He also revealed that out of the $53.9million loan, $20.1million with interest rate of $40million has been paid, leaving an outstanding loan of $27.5million.
He stated that the African Development Bank is the international lender of the loan while Zenith Bank, United Bank of Africa and First City Monument Bank are the local lenders.
