The Niger state House of Assembly yesterday rejected the request of Governor Abubakar Sani Bello to secure N21.5 billion Sukuk loan due to what the lawmakers observed as “some embedded high costs the bond is meant to incur.”
The House decision followed the adoption of recommendations by its Special Committee on Sukuk bond, presented by Abdulmalik Kabir, at its sitting yesterday in Minna.
Chairman of the committee, Kabiru, said the management fees, contingency and professional fees embedded in the loan was not acceptable.
He pointed out that the cost of underwriting and consultancy fees inclusive of the 17 per cent interest rate to the tune of over N10 billion was on the high side; hence the rejection.
According to him, “the monthly deduction from the FAAC would be N255 million, declaring that at the end of the seven (7) years repayment period, the state would have paid N31.5 billion for the N21.5 billion bond.”
He said that the interest of 17 per cent would translate to N8.9 billion, other fees and expenses would translate to N431 million while the professional fees would amount to N939 million.
He said, “with the state debt profile at N57.9 billion, if the government is allowed to take the bond, it would put the state into financial comatose”.
He added that “with the payment of N750 million monthly as debt services, N255 million which would be the monthly deduction for the repayment of the Sukuk bond would be too much for the state to bear monthly.
The committee, therefore, rejected the request to secure N21.5 billion Sukuk bond by the state governor.
Speaker of the House, Ahmed Marafa, therefore directed Clerk, Abdullahi, to communicate the decision to the governor.