Reported By Patrick Ogbogu
The Delta State House of Assembly has approved the restructuring of the state’s outstanding commercial Bank loans of N69, 801,191,730 Billion into federal government of Nigeria Bonds. This bank loans figure is however lower than the N98.62 Billion, quoted by Governor Okowa during his State of the Financial affairs of the state address to the Delta State House of Assembly, on June 25, 2015, which he had said was the Revenue Bond and Commercial indebtedness of the state to Commercial Banks.
The approval followed an official request from the state government via a letter from the governor and read by the Speaker of the House, Hon Rt. Monday Igbuya, who presided over the day’s emergency plenary of the House.
According to the letter signed by the State Deputy Governor, Barr Kingsley Otuaro on behalf of the government; “The restructuring of the state’s commercial Bank loans into federal government Bonds became necessary following the inability of many states to meet up with their salary obligations due to the declining revenue from federal allocations”.
The letter further noted that the dire financial situation was further worsened by the huge debt services burden occasioned by the commercial bank loans, adding that an approval has been given by the federal government for the restructuring of outstanding state’s commercial bank loans in FGN Bond.
The letter also indicated that the Debts Management Office, DMO, had requested the state government to advice the Federal Ministry Of Finance on its intention to restructure its outstanding commercial bank loans as at June 30, 2015 into federal government Bonds and the request had been approved by the state executive council on July 13, 2015, even as it added that based on the debt management office proposal, the federal government bonds would now have a tenure of 15-20 years or 180-240 months as against the maximum of 3-4 years tenure lending, it had earlier been operating.
Governor Okowa then enumerated the inherent benefits of the restructuring to include: long repayment period for the loan and reduction in the monthly debt services burden and in the amount required for debt services due to lower interest rate of the federal government bonds, compared to interest rates of commercial bank loans.
The Majority Leader of the House, Hon Tim Owhefere subsequently moved the motion for the House to receive the letter for consideration and approval, after the letter had been read and the Deputy Majority Leader, Hon Oboro Preyor and Hon. Alphonsus Ojo seconded the motion, which was then approved by the House through a voice vote requested by
the Speaker, Rt. Hon Monday Igbuya.
The House later adjourned to Tuesday August 4, 2015.