DTSG only guaranteed N7.99 bn facilities to roads projects contractors and Delta Line, Edevbie explains
By Jon Egie
The Hon Commissioner of Finance, Olorogun David Edevbie has thrown light on the recent resolution of the Delta State House of Assembly to support the State Government request for 7.99 billion naira facility from the Zenith Bank plc.
It was reported that the Delta State House of Assembly, DTHA, approved a loan request of the said sum to be borrowed from Zenith Bank by the State Government, prompting a section of the public to insinuate insincerity on the part of the Executive and Legislative arms of Government of the State at a time the State was still struggling to keep its economy afloat.
But the Hon Commissioner of Finance, Olorogun David Edevbie in a statement signed by him explained the import of the State Government’s action saying the approval was neither a loan nor a borrowing but a guarantee for shareholders to accelerate execution of road projects by contractors and to revamp the ailing Delta Line Transport Services Limited (Delta Line).
“These are not borrowings by the State Government but guarantees for loans to third parties granted in the Public interest” he informed.
He said in a bid to revamp the ailing Delta Line which had relied on continuous assistance from the State Government to meet salary and other recurrent as well as capital expenditure, the State sold 60 per cent equity of the company to God Is Good Transport Development Company (GIGTDC) in a Public Private Partnership arrangement, retaining 40 per cent in the company.
“Sequel to the sale which amongst other things involved defrayment of outstanding commitments including salaries arrears, the new management of Delta Line submitted a 5-year Business Plan to shareholders which among other things, envisaged a capital injection of N4.99 billion for the procurement of 130 commuter buses as well as the renovation/establishment of 18 terminals with Information Communication Technology (ICT) infrastructure and furnishing across the country.
“Due to the inability of the State Government to fund its 40 per cent equity contribution as proposed, it became expedient for Delta Line to raise the required funding via debt supported by the joint and several guarantees of shareholders. Consequently, the State Government on July 11, 2018 agreed to jointly guarantee with other shareholders, the proposed term loan facilities of N4.99 billion sought by Delta Line which was support by the DTHA on March 19, 2019.
“The envisaged benefits of a fully operational Delta Line include direct and indirect employment for at least 1,500 Deltans, increased independently generated revenue, better public services and increased economic activities in the State.
“Due to a fall in Federation Account receipt in January 2019, which hindered planned payments to some contractors handling road projects, it became necessary for the State Government to support the contractors in accessing financing to accelerate execution of the projects before the onset of the rainy season.
“On February 5, 2019, the State Government agreed to support the contractors to obtain short-term facilities amounting to 3 billion naira from Zenith Bank plc by way of a guarantee which would be repaid by June 2019 and this was supported by the DTHA in a resolution passed on March 19, 2019”. Edevbie explained.