Juliana Taiwo-Obalonye, Abuja
The Federal Government has announced the reappointment of a consortium of banks including Citi Group, Standard Chartered, StanbicIBTC, Whitten-Case and African Practice, to handle the $2.5 billion Eurobond.
Minister of Finance, Kemi Adeosun disclosed this, on Wednesday, to State House Correspondents on the $2.5 billion External Borrowing for refinancing at the end of Federal Executive Council meeting presided over by President Muhammadu Buhari.
The minister, while speaking on the impact of the use of the Proceeds of the $500 million issued in November 2017, disclosed that the proceeds about N162.50 billion were used to redeem Nigerian Treasury Bills (NTBs) which matured in December 2017.
“The immediate impact was a significant drop in the Bid Rates at the Auctions of both NTBs and FGN Bonds. In December 2017 and January 2018″
The NTBs, she disclosed dropped from about 16% to 13%, while the Bonds dropped from about 16-16.50% to 13.50%
According to her ” translates to savings for Government on new borrowing while also making the cost of borrowing for the real sector cheaper since the sovereign rate serves as a benchmark for other borrowers
This was just as the Federal Government announced potential Savings on the proposed $2.5 billion Refinancing, estimated at N64b per annum.
“The estimated proceeds of the N762.5 billion will be used to redeem NTBs. At estimated current NTB rates of 15% (following mop-up operations by the CBN), the savings from the refinancing of N762.5 billion of Domestic Debt using external capital raising is about N64 billion per annum.”
Minister of State, Aviation, Hadi Sirika, said Council had approved the substitution of Lufthansa consulting with AMG (Airline Management Group) and Avia Solutions GE to join the other members of the consortium provide transaction advisory services for the establishment of National carrier at the same cost of N341,200 million.
Sirika explained, “Today Council considered a memo from transportation regarding aviation. It was a memo that was brought to substitute a member of the consortium that will provide transaction advisory services for the establishment of National carrier. And that member of the consortium is Messers Lufthansa consulting.
“Council considered and approved that substitution with another company called AMG (Airline Management Group) with Avia Solutions GE to join the other members of the consortium to continue providing that the same cost of N341.200 million.
“On why we substituted Lufthansa Consulting, fundamentally there are two reasons. One, that particular member of consortium, Lufthansa Consulting, in the wisdom of the council we felt that Lufthansa consulting is an appendage of the airline group and that might bring conflict of interests because Lufthansa themselves may want to join, partner or help in the process during the procurement phase of this transaction. And of course they are members of Star Alliance, members of One World and members of Sky Team, others may feel shortchanged that the person advising us to set up this airline which is going to be private sector driven, is a member of an alliance which they are not part of.
“Secondly, since we appointed the transactions advisers in various aviation projects in May 2017, about six of them, five of them have gone ahead, the one for construction of airport, the one for aeropolise and the one for MRO and so on and so forth. Most of them have produced the outline business cases and we are on our way to doing the full business case. However, Lufthansa Consulting, did not accept the offer neither have they signed any contract. They countered the offer instead. One of the conditions the out is that we should pay them 75 percent of the total cost, which is against our procurement law, they also wanted us to change the contract from Naira to Euro, they also wanted us to open an Escrow account in an internationally recognized bank outside the country where the money will be domiciles etc.
“So we found that that was against our procurement law and we have been going back and forth for seven months to see whether they can accept the terms of conditions and even if they had done at a time and they didn’t uptill today, we couldn’t continue with them because it will compromise the system which we thought should be transparent, so that is why we sought the approval of council to substitute them why a neutral person and someone who will accept the terms and conditions given, to accept payment in Naira, to accept 15 percent payment of the entire cost as against 75 per cent etc.”
Minister of the Interior, Abdulrahman Dambazau, said Council approves the purchase of 35 operational vehicles for the Nigeria Immigration Service at a cost of N483.21 million, including the cost of painting the vehicles in NIS colours for N4.09 million.
He said the Buhari’s administration has approved 17 memos for various procurement, etc.
He said some of The policy issues discussed during the period under review, include strategy for handling prisons decongestion/rehabilitation to meet international standard, budgets addressing faculty issue. Prisoners on death roll, lifeers, aged etc.
On his part, the Minister of Communication, Adebayo Shittu, said council had approved radio equipment to detect illegal radio signals with a view to blocking them.