FG reappoints consortium of Banks to handle $2.5bn Eurobond

.Drops Lufthansa as adviser on national carrier establishment

.Okays N483m for Immigration vehicles, painting

The Federal Government has announced the reappointment of a consortium of banks including Citi Group, Standard Chartered, StanbicIBTC, Whitten-Case and African Practice to handle the $2.5 billion Eurobond – External Borrowing for refinancing of the deficit component of the 2018 Budget.

Minister of Finance, Mrs Kemi Adeosun, disclosed this on Wednesday to State House Correspondents in Abuja at the end of the Federal Executive Council (FEC) meeting, presided over by President Muhammadu Buhari.

Adeosun, while speaking on the impact of the use of the proceeds of the $500million issued in November 2017, the proceeds of N162.50billion were used to redeem Nigerian Treasury Bills (NTBs) which matured in December 2017.

“The immediate impact was a significant drop in the Bid Rates at the Auctions of both NTBs and FGN Bonds in December 2017 and January 2018.”

She also disclosed that the NTBs dropped from about 16% to 13%, while the Bonds dropped from about 16-16.50% to 13.50%.

According to her, “this translates to savings for Government on new borrowing while also making the cost of borrowing for the real sector cheaper since the sovereign rate serves as a benchmark for other borrowers.”

This is just as government announced potential savings on the proposed $2.5billion Refinancing, estimated at N64billion per annum.

“The estimated proceeds of the N762.5 billion will be used to redeem NTBs.

“At estimated current NTB rates of 15% (following mop-up operations by the CBN), the savings from the refinancing of N762.5 billion of Domestic Debt using external capital raising is about N64 billion per annum,” she added.

Meanwhile, the Minister of State, Aviation, Hadi Sirika, said that Council has approved the substitution of Lufthansa consulting with AMG (Airline Management Group) and Avia Solutions GE to join the other members of the consortium to provide transaction advisory services for the establishment of National carrier at the same cost of N341,200million.

Sirika said: “Today Council considered a memo from transportation regarding aviation. It was a memo that was brought to substitute a member of the consortium that will provide transaction advisory services for the establishment of National carrier. And that member of the consortium is Messers Lufthansa consulting.

“Council considered and approved that substitution with another company called AMG (Airline Management Group) with Avia Solutions GE to join the other members of the consortium to continue providing advisory services at the same cost of N341.200 million.

“On why we substituted Lufthansa Consulting, fundamentally there are two reasons. One, that particular member of consortium, Lufthansa Consulting, in the wisdom of the council we felt that Lufthansa consulting is an appendage of the airline group and that might bring conflict of interests because Lufthansa themselves may want to join, partner or help in the process during the procurement phase of this transaction. And of course they are members of Star Alliance, members of One World and members of Sky Team, others may feel shortchanged that the person advising us to set up this airline which is going to be private sector driven, is a member of an alliance which they are not part of.

“Secondly, since we appointed the transactions advisers in various aviation projects in May 2017, about six of them, five of them have gone ahead, the one for construction of airport, the one for aeropolise and the one for MRO and so on and so forth. Most of them have produced the outline business cases and we are on our way to doing the full business case.

“However, Lufthansa Consulting, did not accept the offer neither have they signed any contract. They countered the offer instead. One of the conditions is that we should pay them 75 percent of the total cost, which is against our procurement law. They also wanted us to change the contract from Naira to Euro, they also wanted us to open an Escrow account in an internationally recognised bank outside the country where the money will be domiciles, etc.

“So we found that that was against our procurement law and we have been going back and forth for seven months to see whether they can accept the terms of conditions and even if they had done at a time and they didn’t uptill today.

“We couldn’t continue with them because it will compromise the system which we thought should be transparent; so that is why we sought the approval of council to substitute them with a neutral person and someone who will accept the terms and conditions given, to accept payment in Naira, to accept 15 percent payment of the entire cost as against 75 per cent, etc.”

Similarly, the Minister of Interior, Abdulrahman Dambazau, said Council approved the purchase of 35 operational vehicles for the Nigeria Immigration Service at a cost of N483.21million, including the cost of painting the vehicles in NIS colours for N4.09 million.

Dambazau said that the Buhari’s administration has approved 17 memos for various procurement, etc.

He said some of the policy issues discussed during the period under review, include strategy for handling prisons decongestion/rehabilitation to meet international standard, budgets addressing faculty issue, prisoners on death roll, lifeers, aged, etc.

On his part, the Minister of Communication, Adebayo Shittu, said council had approved radio equipment to detect illegal radio signals with a view to blocking them.