By Amos Aar
THE Benue State House of Assembly has approved a long-term loan facility to the tune of twenty-billion-naira (20,0000,0000,000.00) loan facility from the Central Bank of Nigeria’s Differentiated Cash Reserve Requirement (DCRR) and urged Governor Ortom’s administration to use the money mainly to pay arrears of salaries, Pension and gratuity when accessed.
The assembly also approved the sum of two-billion-naira (N2,000,000,00) overdraft facility for the state government to meet some statutory local government needs.
The assembly gave its approval for the replacement of Access Bank with Fidelity to enable the state government to access the loan.
The assembly’s approval followed a correspondence to that effect from Governor Ortom during Monday’s plenary presided over by Deputy Speaker of the House, Hon. Christopher Adaji.
“The Honourable Speaker may wish to be informed that although the Federal Ministry of Finance, Budget and National Planning has approved the request to access the fund as stipulated by the Central Bank of Nigeria (CBN), Access Bank PLC nominated by the state government and approved by the Assembly has declined to conclude the process and provide the funds until the state agrees to an upward review of the interest rate from concessionary rate of 9% to a commercial rate of between 18% and 22%.
“Consequently, upon this development, Fidelity Bank was approached and the Bank has agreed to provide the fund under the same terms and conditions and in accordance with the CBN guidelines for the DCRR.
“Mr Speaker, based on this scenario, the resolution of the House of Assembly is now required to enable the State replace Access Bank Plc with Fidelity Bank Plc and communicate same to the Federal Ministry of Finance, Budget and National Planning, the Central Bank of Nigeria and Debt Management for necessary action,” the correspondence reads in part.
The correspondence further detailed that the N20bn long-term loan is to be accessed at a concessionary interest rate of 9% per annum with a repayment plan of 120 months (10 years) including 24 months moratorium on principal repayment offered by Fidelity Bank Plc and sourced from the DCRR of the CBN “with a repayment monthly interest of one hundred and fifty million naira (N150,000,000.00) for 24 months and two hundred and ninety-three million, four thousand, sixty-five naira, forty-seven kobo (293, 004, 065.47) for the remaining 96 months for principal and interest repayments from the government share of statutory allocation from the Federation Account into the account domiciled with the Fidelity Bank for that purpose.”
On the overdraft facility, the state government requested for the approval of the lawmakers in its correspondence that the two-billion-naira overdraft will enable the meeting of some statutory local government needs.
“The attention of the Honourable Speaker is kindly invited to a request by the 23 local government councils for an overdraft facility of Two Billion Naira (N2,000,000.00) from Fidelity Bank Plc to supplement incomes from the Federation Account Allocation Committee (FAAC) so as to meet some critical statutory needs of the local governments.
“Mr Speaker is already aware of the existing funding gap that has made it impossible for local government councils to meet statutory obligations of local governments and responsibility of the Benue State local government Joint Account Allocation Committee (JAAC) to source for funds including overdraft for the efficient management of council areas.
“Mr Speaker may also be aware of requirements by banks for local governments to now obtain both Executive Council approval and State Assembly resolution to be able to access credit facilities from banks and other financial institutions”, another correspondence from the Governor read partly.
The correspondence indicated that that the N2bn overdraft facility is to attract an interest rate of 25% for 90 days from Fidelity Bank Plc.
