N100bn Sukuk proceeds for 28 road projects – FG

January 11th, 2019

By Chika Otuchikere

The Federal Government on Thursday, issued a N100 billion cheque to six construction firms chosen to work on 28 road projects crisscrossing the six geopolitical regions of the country.

The N100 billion which is part of proceeds from Sovereign Sukuk bond issued in December, will be used to construct the 642.69km roads.

The Minister of Finance, Mrs. Zainab Ahmed who presented the cheque to the Minister of Power, Works and Housing, Mr. Babatunde Fashola, said the performance of the December Sukuk bond showed that it was gaining rapid acceptance.

She said that there was a significant increase in the level of participation of retail investors from about four per cent in 2017 Sukuk issuance to 17.3 per cent in 2018.

The minister noted that this meant that the objective of financial inclusion and deepening of investor base of the Federal Government securities were gradually being achieved.

She, however, clarified that the N100 billion Sukuk funds would be used to further support the government’s capital spending on road projects already captured in the 2018 budget.

A breakdown of investors’ contribution to the funds, which the minister gave, showed that 40.69 per cent came from pension fund administrators, 17.5 per cent from Deposit Money Banks and 17.33 per cent from retail investors.

Ahmed also disclosed that 11.65 per cent came from fund managers and non-bank financial institutions, 10.94 per cent from non-interest banks and 1.89 per cent of the fund came from other investor.

Mr. Fashola, who received the cheque on behalf of the construction firms, said that the money was shared equally among the six geo-political zones.
According to him, each geo-political zone would get N16.67 billion for the number of roads to be completed in them.

He gave a breakdown of the road which indicated that six roads would be constructed in the North Central, five in the North-East, four in the North-West, another four in the South-East, six in the South-South and three in the South-West.

Fashola said that the impact of Sukuk bond would be felt on nation building through job creation, growth and employment.

The minister listed beneficiaries of the project to include the Federal Government contractors, suppliers of building materials, artisans, miners and steel companies and the banks.

He also said that the entire economy would benefit from it, as construction was a major driver of any economy.

The Director-General of the Debt Management Office, Ms. Patience Oniha, in her remarks at the event, said that the N100 billion Sovereign Sukuk was a seven year bond and repayment would be due in 2025 at an interest rate of 15.74 per cent.

She noted that, “the high level of subscription and participation by a diverse range of investors demonstrate the high level of investor confidence in the financing product, particularly, because the road projects funded with the proceeds of the first Sukuk issued in 2017 were evident for all to see”.

The construction firms selected for the projects in all the regions include Salini Nigeria Limited, Dantata and Sawoe Construction Company Limited, Gitto Construczinoi Generali Limited, CGC Nigeria Limited, Raynolds Construction Company Nig Ltd. Setraco Nigeria Limited, Mothercat Limited, GCECC Nigeria Limited, Hajaig Nigeria Limited, Eksiogullari Nigeri Limited and Arab Contractor Nigeria Limited.

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