31st July, 2011
Amid the controversy surrounding the plans to go to the capital market ,and the criticism from the opposition, Rivers State Governor, Rt. Hon. Chibuike Rotimi Amaechi has again explained why his administration plans to issue bond at the capital market for funding major developmental projects.
A statement by the spokesman to the governor, Mr. David Iyofor, stated that the bond would be tied to funding specific developmental projects.
The projects, he said, include the Greater Port Harcourt City, the Port Harcourt Monorail project, the new Rivers State University of Science and Technology Phase 1, Monte@Rivers (an entertainment complex), the Port Harcourt Ring Road(that would connect the old city and Greater Port Harcourt) and a new M-10 Highway (a beltway that would link the Port Harcourt International Airport to the Onne Sea port).
Iyofor explained that such audacious gigantic projects would need immediate and massive funds injection to complete them. Hence Rivers State plans to approach the capital market in October this year to raise these funds.
He added that already the State House of Assembly has given the nod for the governor to go ahead and obtain the bond as such projects cannot be accomplished by sheer reliance on Federal Allocation and internally generated revenue that come in trickles.
Explaining further the details of the bond, Rivers State Commissioner for Finance, Dr. Chamberlain Peterside said, “these long term capital projects that are capable of catalyzing the industrialisation and transformation of Rivers State require massive financial investment that can only be obtained from the capital market.
“The proposed size of the first tranche of the bond will be about 100 billion naira with five years tenures, whereas the total bond programme of 250 billion naira is envisaged over the next several months.â€
Rivers State remains very buoyant financially with sizeable revenue accruing from both the Federation Account and IGR. The State has set a target of earning at least half of its total revenue from IGR over the next one to two years.
According to Peterside, “whilst energy prices remain relatively high on the world market in an atmosphere of somewhat low to moderate interest rate, Rivers State would benefit from a bond issue at this stage through leveraging its high income potential and favourable credit rating, coupled with a debt portfolio that is currently low at less than N30 billion.
“The economic indicators of the state, including annual Gross Domestic Product of about N30 trillion compared to its debt stock are positive attributes that Rivers State can ride on to raise additional funds to finance its long term development agenda and fast track social and economic growth.â€
Peterside noted that the state has moved further to institutionalise its efforts, giving no room for future administrations to violate loan covenants of bonds.
“To ensure that proceeds of bond are efficiently and prudently deployed for the benefit of generations yet unborn, the government through the Ministry of Finance and other agencies is making conscious and relentless effort to modernise and automate Public Accounting System, strengthen the Debt Management Office and establish relevant institutions that can transparently monitor projects, while acting as checks and balances of fund utilization in the public sector.
“With all this in place it is inconceivable that Rivers State will default on the bonds or allow any future administration to violate loan covenants of bonds, thereby laying the groundwork for predictability and continuity in the economic and financial planning process of the state,†he added.
Restating the Rivers State Governor’s commitment to continued infrastructure development for long term sustainable development, Iyofor explained the significance of the huge projects to the state and its people.
“The Greater Port Harcourt City Master Plan shows massive development cutting across over 8 Local Government Areas of the state covering an area of approximately 1900 square kilometers (40,000 hectares of land) with a projected population of about 2 million people.
“We have master plans for roads, housing, power, water, waste water, storm water, and integrated waste management among others. We already have the new stadium and sports complex built within the Greater Port Harcourt axis. The proposed M-10 Highway and the Central Spine road designed with interchanges would link the New city to the Old City in the space of 15 to 20 minutes.
“Completing the Monorail project is a priority. It would cause an optimal decongestion of traffic on Port Harcourt roads and provide a competitive mass transportation solution to the state as the monorail would conveniently transport people in large numbers at a time from one point to another. It would also enhance the aesthetic view of the city.
“The new ultra-modern campus of the Rivers State University of Science and Technology which has a larger land mass would give our children a better and befitting environment to study. These are projects that must be completed and the bond which the State plans to issue in October, coupled with our IGR and Federal allocation would provide all that and much more,†he said.
By Okafor Ofiebor/Port Harcourt