The N3 billion bank loan obtained by the Bayelsa State government to buy cars for the 24 members of the state legislature and security agencies will be repaid at a minimum cost of N5.59 billion- at prevailing interest rates. The Bayelsa State House of Assembly, on 31 January, approved a N3 billion loan request from the executive arm to buy cars for legislators and security agencies. The approval was granted at a closed-door session. Speaker of the Bayelsa State House of Assembly, Mr. Kombowei Benson, had explained that the state government was borrowing over a three -year period.
The decision to borrow and subsequent approval provoked criticisms from civil servants, who had not been paid for six months. They branded the decision to buy cars for legislators as unfeeling. SaharaReporters’ investigations into the loan deal revealed that the N5.59 billion that it will cost the state is exclusive of cost excludes other charges such as management fees usually charged on such facilities.
Money Market Indicators figures obtained from the website of the Central Bank of Nigeria (CBN) showed that maximum lending rates stood at N28.88 per cent in January and N29.26 in February. Sources in the banking and financial services sector told SaharaReporters that the N5.59 billion estimate was arrived at using the CBN approved lending rate for commercial banks, which hovers around 28 and 29 percent.
Mrs. Blessing Ezeoha, a banker, explained that computing the charges on such facilities is a tricky undertaking, as terms and conditions of banks vary within the window allowed by the CBN.
The best you can get is the baseline rate approved by the CBN, which guides the market, and that is the maximum permissible. Some banks can still discount something depending on the negotiating power of those packaging the facility.
“If you go by the prevailing rates you get N5.59billion if you take the January rate you get N5.59billion and that is the minimum because the other associated charges are not yet factored in,” Mrs. Ezeoha said.
Mr. Jonathan Obuebite, Bayelsa State Commissioner for Information, justified the borrowing, saying that the use to which the loan is to be put is a necessity, not misplaced priority.
He described, as inaccurate, reports that the government was taking the loan to buy cars for political appointees.
“The notion that the Bayelsa State government obtained N3 billion to buying of cars and distributing to political appointees is not correct. The fact is that a component of the facility is to provide cars for the Assemblymen, while the rest will go to the security outfits,” Mr. Obuebite said.
He added that the government will not be taking the loan at once, saying N3 billion is the total sum that will be taken over a three-year span.
He, however, explained that the executive arm of the government consolidated the figures so that it will not be requesting separate approvals. “So it is based on a plan to provide patrol cars for the security services like the Police, Civil Defence, Joint Task Force, Airforce, and Navy. They all need operational vehicles to deliver effective security service to our people. Indeed the component for the legislators is relatively small and it is deductible from their emoluments, ” Mr. Obuebite
He also dismissed the view that it was inappropriate to seek the loan at a time civil servants were owed six months’ salaries. The Commissioner said a committee had been set up to find ways of paying the workers at the time the loan was approved.
“We are all witnesses to the economic downturn affecting the country. Some states are owing more than 12 months, but we have informed workers of our plans to clear all outstanding,” Mr.Obuebite said.