Osinbajo Meets Saraki, Dogara, Gets No Objection for $1bn Eurobond

 Acting President Yemi Osinbajo yesterday met with Senate President Bukola Saraki and the Speaker of the House of Representatives, Hon. Yakubu Dogora behind closed doors to ask the leadership of the National Assembly to convene an emergency session of the legislature, which is currently on recess, to approve the federal government issuance of a $1 billion Eurobond this quarter. 

Also at the meeting were the Minister of Budget and National Planning, Senator Udoma Udo Udoma and his finance ministry counterpart, Mrs. Kemi Adeosun.

A Eurobond issue, amounting to $4.5 billion, forms part of the federal government’s three-year $30 billion external borrowing programme, which was rejected by the National Assembly last year.

However, at yesterday’s meeting, THISDAY gathered that Saraki and Dogora, were reported to have informed Osinbajo that the emergency session would not be necessary since the National Assembly had already approved $3 billion external borrowing, including the $1 billion Eurobond, in the 2016 Appropriation Act.

According to sources conversant with the meeting, both men allayed Osinbajo’s concern that the National Assembly’s rejection of the $30 billion borrowing plan would impede the $1 billion Eurobond issue.

One source said: “They informed the acting president that an emergency session was not necessary and gave their no objection to the $1 billion Eurobond, since an external borrowing programme of $3 billion had already been approved in the 2016 budget.

“They also informed Osinbajo that there would be a joint meeting of the leadership of the National Assembly at the Senate President’s residence tonight (last night), during which their colleagues will be updated on their meeting with him and the decision not to object to $1 billion Eurobond on the basis of its approval in the 2016 budget.”
The source also revealed that at the joint meeting of the leadership of the National Assembly last night, the 2017 budget was discussed and measures to be adopted to get its early passage by the legislature.

Briefing newsmen after the meeting at the State House, Saraki said: “We met on the economy and the budget; myself, the vice-president and the Speaker, Minister of Budget and Minister of Finance.

“We are aware that the economic team will soon be going on a road show (on the Eurobond) and so the meeting was just to brief us and let us know the issues and just carry us along.
“We have just started the budget defence so there are no issues, these
are just consultations.”

Last November, the federal government indicated that it would issue the $1 billion Eurobond in the first quarter of this year.

In this regard, the Minister of Finance, Mrs. Kemi Adeosun announced that Citigroup, Standard Chartered Bank and Stanbic IBTC Bank had been appointed to manage the planned $1 billion Eurobond and would manage any follow up Eurobond issues for Nigeria over the next three years so as to cut short the tender process for new advisers.

In a related issue, the Minister of Transportation, Mr. Rotimi Amaechi yesterday said the National Assembly’s approval of the government’s $30 billion borrowing plan was critical to the completion of the Calabar-Port Harcourt, Lagos-Kano and Kano-Kaduna rail lines under his ministry’s 2017 capital programme.

Speaking with reporters in Abuja after defending his ministry’s budget at the National Assembly, he said in view of the federal government’s funding constraints, it was imperative that the lawmakers approved the three-year external borrowing plan.

He said: “But critically and importantly for overall national development, the National Assembly needs to give the executive the approval. They need to approve the borrowing plan because government can’t go to China to sign the loan agreement unless it gets approval from the National Assembly.”

Amaechi explained that the government has made available its 15 per cent counterpart funding for the Lagos-Ibadan rail line, promising that work would begin on the project in March unfailingly.

“On the Itakpe-Ajaokuta-Warri rail line, the contractors demobilised from site since 2012; the contractors told me they got completion certificates not because the project had been completed but because government did not want to continue with it.

“They therefore left site in 2012 but we have remobilised them and they are back on site. They proposed that they need N80 billion to do this,” he said.

Amaechi revealed that government was renegotiating with a Chinese company under a public private partnership arrangement to continue the rail project from Abuja to Itakpe and from Aladja to Warri, with a new deep sea port proposed for Warri.

On why the ministry has not started work on the Calabar-Port Harcourt and Kano-Kaduna rail lines, he admitted that the bulk of the funding for both projects would come from external loans to be sourced from the China Exim Bank, making it critical for the legislature to approve the borrowing programme.

He said: “The Calabar-Port Harcourt project will cost $3.4 billion while Kano is $1.2 billion. The total amount for Lagos-Ibadan is $1.5 billion, bringing the total to $6.1 billion for all three projects. Our 15 per cent is ready, so we are waiting for the China Exim Bank.”

On what the country stands to benefit in the short run, he said: “What is also critical is that numerous Nigerians will be employed if we get this approval.

“Imagine how many Nigerians will be employed between Lagos and Ibadan, Kano to Kaduna, and Lagos to Port Harcourt.”
He said it will be to the benefit of the country if the lawmakers approved the $30 billion as most of the $6.1 billion needed to develop the rail sector is embedded in that money.

Amaechi said: “It will do us good if the National Assembly can approve this loan of $30 billion, because the $6.1 billion is part of it and that is why we need the approval.

“What was approved in the 2016 budget was the counterpart funding of 15 per cent. But we need their approval to borrow. Because if you look at $6.1 billion and we are paying 15 percent of $6.1 billion, you will see that the bulk, which is 85 percent, is what we are expecting to get from China.

“Until we can get the approval of the National Assembly, we can’t move forward. Even now the China Exim Bank has approved the $1.5 billion for the Lagos-Ibadan rail line, but we still need the approval of the lawmakers to go ahead and sign the loan.”