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30.07.2004 Business & Finance

Nigeria grants Ghana $40 Million loan

By Vanguard
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ABUJA— PRESIDENT Olusegun Obasanjo has approved a loan of $45 million (N6.2 billion) for Ghana and Sao Tome and Principe to assist the two countries.

Information on the loan was conveyed vide a letter to Senate President, Chief Adolphus Wabara, which was read on the Senate floor yesterday. The announcement drew spontaneous mutterings from the opposition side in the Senate chambers. However, the misgivings about the loan package were drowned by the dominant PDP majority aided by the Senate president. A move by Senator Mohammed Anka, Senate minority whip, to question the loan was dismissed by Senator Wabara who asked him if he wanted his own personal loan.

N5.52 billion ($40 million) of the loan package is to help Ghana complete its part of financing of the West African Gas project, while N690 million ($5 million) is to enable Sao Tome and Principe meet emergency needs of the little island nation.

The loan package was hailed by some Senators including Senators Inatimi Spiff (PDP, Bayelsa), Isa Mohammed (PDP, Niger) and Farouk Bello (ANPP, Kebbi).

While observing that the procedure for the granting of the loan may not have been completely regular, Senator Bello asked the government to put structures on ground so that the country could benefit from loans given to neighbouring countries. He welcomed the loan as a practical approach by the country to assert its dominance in the sub-region.

Senator Mohammed, while welcoming the assistance, said the move would also help the country's quest for permanent membership of the United Nations Security Council. Commenting on the loan, Senator Spiff said: "Nigeria plays a very significant role in the affairs of the sub-region and what the President has done is to bring that role to the fore. Moreover, the purpose which the loan is being given to Ghana is actually of mutual interest to us and it is acceptable to most of us in the Senate.”

The President's letter dated July 27, 2004 reads in part: ”I am writing to you at this time to inform you about emergency requests from two of our sister countries, Ghana and Sao Tome, respectively. The Republic of Ghana solicits our assistance for the sum of US$40 million, while Sao Tome requires our brotherly support to the tune of US$5 million.

“My colleagues, the leaders of these countries have put persuasive facts on the table on their emergency situations and why they need these loans. In the case of Ghana, the loan is needed to complete Ghana's share of the financing for the West African Gas Pipeline project which is designed to sell Nigerian gas to neighbouring West African countries. With regard to Sao Tome & Principe, the loan will help meet emergency needs of the country pending access to their revenues from the licensing fees of the Joint Development Zone (JDZ).

“The Federal Republic of Nigeria is well-known for her belief in and commitment to the spirit of good niegbbourlineess and assistance to our African brothers. The need to sustain good relationships and mutual cooperation between Nigeria and the two countries cannot be over-emphasised. The recent treaty signed on the Joint Development Zone (JDZ) between Nigeria and Sao Tome lends credence to the excellent diplomatic relationship that exists between us. Their recourse to Nigeria at this hour of need is, therefore, not surprising.

“After careful consideration and consultations, it will be in the interest of our country to accede to the requests. Also, it will not adversely affect our programmes for year 2004 because the resources are being sourced as a loan from the Central Bank of Nigeria. Accordingly, I have approved the loans of $40 million and $5 million to Ghana and Sao Tome, respectively and seek your understanding on this.

“The loans will be repaid as follows: In the case of Sao Tome, the loan amount will be deducted from the proceeds of the Sao Tome share of licensing fees from the JDZ oil blocs when these become available. With regard to Ghana, repayment will be within three years on terms and conditions to be agreed between the Minister of Finance and Ghanaian counterpart.”

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