Oyo Assembly backs N400bn financing deal to fund projects

The Oyo State House of Assembly has approved a fresh N100bn loan at 22 per cent interest and a separate N300bn debt refinancing deal to transfer the state’s existing contractors’ finance facility from Access Bank to United Bank for Africa (UBA).

The approvals followed a request by Governor Seyi Makinde in a letter read during plenary on Wednesday by Speaker Adebo Ogundoyin.

The N100bn loan is intended to accelerate ongoing infrastructure projects and fund other development initiatives across the state’s 33 local government areas, while the N300bn facility will refinance an existing contractors’ finance arrangement secured from Access Bank at an interest rate of 26 per cent.

Lawmakers said the refinancing would reduce the state’s borrowing costs, with UBA expected to provide the facility at 22 per cent, a four-percentage-point reduction from the existing rate.

The separate N100bn loan will also attract interest at 22 per cent, subject to review in line with prevailing money market conditions. It has a repayment period of 48 months.

Its terms include a management fee of 0.25 per cent per annum on the outstanding amount and an annual advisory fee of 0.5 per cent on the outstanding balance.

The facility also provides for a three-month moratorium on repayment of principal and interest. Interest accrued during the moratorium will be repaid alongside the fourth, fifth and sixth instalments.

During deliberations, Deputy Speaker Abiodun Fadeyi and lawmakers Gabriel Adebayo, Olorunpoto Rahman and Sunkanmi Babalola backed sustained infrastructure spending, arguing that completing ongoing projects would improve public services and stimulate economic activities.

They cited the Ladoke Akintola University Teaching Hospital in Oyo town, the Rashidi Ladoja Circular Road and the Ido-Eruwa Road as projects expected to improve connectivity and access to essential services.

The lawmakers said completing the projects would ensure that investments already made translated into tangible benefits for residents, while creating jobs and improving the movement of people and goods across the state.

With the Assembly’s approval, the N100bn facility will provide additional funding for infrastructure development, while the N300bn refinancing arrangement is expected to consolidate the state’s contractors’ finance obligations under UBA at a lower interest rate.