Oyo Assembly Approves Makinde’s N100bn Fresh Loan, N300bn Debt Refinancing — N400bn Deal With UBA
The Oyo State House of Assembly has approved a combined N400 billion financial deal for Governor Seyi Makinde’s administration — a fresh N100 billion loan for infrastructure and a N300 billion refinancing of an existing contractors’ facility.
The approval was granted on Wednesday during plenary, following a request by Governor Makinde contained in a letter to the Speaker, Adebo Ogundoyin.
According to the governor’s request, the state government will obtain the new N100 billion loan from United Bank for Africa, UBA Plc, and transfer its existing N300 billion contractors’ finance facility from Access Bank to the same lender.
While the N100 billion facility is intended to provide fresh funding for critical infrastructure projects and accelerate the completion of ongoing developments, the N300 billion component is not fresh borrowing but a refinancing arrangement to lower interest costs.
Under the proposed terms, the existing contractors’ facility obtained from Access Bank at 26 per cent interest will be transferred to UBA at 22 per cent, representing a four percentage points reduction.
The separate N100 billion fresh loan will also attract 22 per cent interest, subject to review in line with prevailing money market conditions.
The fresh facility has a repayment tenor of 48 months, with a management fee of 0.25 per cent per annum and an advisory fee of 0.5 per cent annually, both calculated on the outstanding balance.
The terms also provide for a three-month moratorium on repayment of principal and interest. Interest accruing during the moratorium will not be waived but will be repaid alongside the fourth, fifth and sixth instalments of the loan.
During deliberations, Deputy Speaker Muhammad Abiodun Fadeyi and other lawmakers including Adebayo Babajide Gabriel, Olorunpoto Cephas Rahman and Sunkanmi Babalola defended continued infrastructure investment as necessary for economic growth.
The lawmakers cited the LAUTECH Teaching Hospital in Oyo town, the Rashidi Ladoja Circular Road and the Ido-Eruwa Road among projects whose timely completion, they argued, would deliver wider economic benefits.
They maintained that sustained investment in infrastructure would improve connectivity, create employment, stimulate commercial activities and ease movement across the state.
The approval gives the Makinde administration legislative backing to proceed with the arrangements, with the fresh N100 billion expected to support infrastructure delivery while the N300 billion refinancing is designed to secure a lower rate on an existing obligation.
However, the two components carry different implications — the N100 billion will create a new borrowing obligation, while the N300 billion refinancing will restructure an existing facility rather than automatically add to fresh debt.
The final cost of the facilities will depend on the outstanding balance, repayment schedule, management and advisory fees, and how the interest review clause is applied over the repayment period.
