The federal government has released the sum of N100 billion raised from the Sukuk bond in December 2018 for Ibadan- Ilorin road, Oyo-Ogbomoso road and 26 other road projects spread across the six geopolitical zones.
The government had in December issued a seven year N100 billion sovereign sukuk with an interest rate of 15.7 per cent as part of its domestic borrowing for the 2018 budget to finance roads projects.
The Debt Management Office (DMO) had at the time announced that the offer which attracted a wide range of retail and institutional investors had a total subscription rate of N132bn.
While presenting the cheque to the ministry of Power, Works and Housing, Minister of Finance Zainab Ahmed said proceeds will be used to further support government capital spending for 2018 including the construction and rehabilitation of 28 key economic roads across the six geo-political zones with each zones having equal allocation of N16.67bn.
She said the Sukuk funding option was part of the initiatives of the government to diversify government funding sources, while also deepening the Nigerian capital market, mobilizing more savings and promoting financial inclusion.
“The use of the proceeds of the issuance has an in-built investor mechanism in two forms, namely; the trustees both registered by securities and exchange commission will monitor the disbursement of the Sukuk proceeds and also the Sukuk proceeds have been ring-fenced in a dedicated account at the central bank to ensure that they are utilized only for the road projects” she said.
She said the funds are released to the ministry of power, works and housing based on the framework agreed with the trustees in order to ensure transparency and accountability in the use of the proceeds.
Also speaking, the DG, DMO, Ms patience Oniha said Sukuk has become a veritable tool for financing infrastructure which has several multiplier effects including job creation and boosting economic activities.
She also added that the sovereign Sukuk is a viable tool for financing infrastructure and it promotes financial inclusion and the development of domestic financial markets.
Some of the road projects include; the dualisation of Suleja-Minna Road in Niger State Phase II, dualization of Abuja – Abaji – Lokoja Road: Section I (International Airport link road junction-Sheda Village Junction) in FCT, dualization of Lokoja-Benin Road: Obajana Junction-Benin Section I Phase I: Obajana – Okene in Kogi State, dualisation of Ibadan – Ilorin Rd (Route No. 2) Section II, rehabilitation Of Enugu-Port Harcourt Road Section IV: Aba-Port Harcourt in Rivers State and dualisation of Ibadan – Ilorin Rd (Route No. 2) Section II. among others