The Lagos State House of Assembly on Thursday approved the state government’s request to issue a N200bn bond and participate in the Federation Account Allocation Committee (FAAC) Receivables Discounting Programme to finance critical infrastructure projects across the state.
The Legislature’s approval was sequel to the adoption of the Joint Committee on Economic Planning and Budget and Finance’s report during plenary session.
Presenting the Joint Committee’s report, the Chairman, Hon. Sa’ad Olumoh, said the committee examined the executive’s requests and found them suitable for legislative approval.
The lawmaker said the Commissioner for Finance, Abayomi Oluyomi, told the committee that the Federal Government introduced the FAAC Receivables Discounting Programme following a proposal by the Nigeria Governors’ Forum to enable states to access funding for infrastructure development.
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Oluyomi explained that under the arrangement, participating states would execute an irrevocable standing payment order authorising the Accountant-General of the Federation (AGF) to deduct agreed sums from their monthly FAAC allocations over 11 months.
According to him, the deductions would be paid into a sinking fund managed by the Debt Management Office and domiciled with the Central Bank of Nigeria (CBN).
The Commissioner assured that the initiative would provide Lagos State with liquidity to finance priority capital projects, including legislative quarters and other strategic infrastructure.
Olumoh added that the committee also recommended approval of the state’s request to raise N200 billion through a Series V conventional bond under its existing N1 trillion Debt and Hybrid Instruments Issuance Programme.
Speaking on the committee’s report, the Chairman of the House Committee on Waterfront Infrastructure, Hon. Gbolahan Yishawu, described the FAAC facility as an advance-payment arrangement under the ISPO framework rather than conventional borrowing.
He explained further that the programme would strengthen the state’s revenue profile because it attracted no interest, but stressed the need for the government to clearly identify the projects to be financed with the proceeds.
The legislator canvassed the need for transparency in its implementation to ensure the financing arrangement amounted to a restructuring of funding sources rather than an increase in the state’s overall budget.
The Speaker of the House of Assembly, Hon. Mudashiru Obasa, expressed his support for the borrowing plan, saying responsible borrowing remained necessary to fund capital projects and accelerate infrastructure development.
He explained that the increase in the proposed bond to N200 billion reflected additional funding requirements and not a computational error, adding that utilisation of the funds will remain subject to legislative oversight and approval to ensure accountability and prudent financial management.
Following the deliberations, the lawmakers unanimously adopted the committee’s recommendations with amendments, authorising the state government to participate in the FAAC Receivables Discounting Programme and proceed with the N200 billion bond issuance.
The approvals of the requests by the Executive, have now given legal backing to the state government to fund some of its key projects, including the New Massey Children’s Hospital, the Lagos Rail Mass Transit Line, Lagos Island General Hospital, Omu Creek Bridge and other strategic infrastructure projects.
