The Lagos State House of Assembly on Thursday approved the state government’s request to issue a N200bn bond and participate in the Federation Account Allocation Committee Receivables Discounting Programme to finance critical infrastructure projects across the state.
The approvals followed the adoption of the Joint Committee on Economic Planning and Budget and Finance’s report during plenary.
Presenting the report, Chairman of the Joint Committee, Sa’ad Olumoh, said the panel examined the executive’s requests and found them suitable for legislative approval.
Olumoh said the Commissioner for Finance, Abayomi Oluyomi, informed the committee that the Federal Government introduced the FAAC Receivables Discounting Programme following a proposal by the Nigeria Governors’ Forum to enable states to access funding for infrastructure development.
He explained that under the arrangement, participating states would execute an irrevocable standing payment order authorising the Accountant-General of the Federation to deduct agreed sums from their monthly FAAC allocations over 11 months.
According to him, the deductions would be paid into a sinking fund managed by the Debt Management Office and domiciled with the Central Bank of Nigeria.
Olumoh said the initiative would provide Lagos with immediate liquidity to finance priority capital projects, including legislative quarters and other strategic infrastructure.
The committee also recommended approval of the state’s request to raise N200bn through a Series V conventional bond under its existing N1tn Debt and Hybrid Instruments Issuance Programme.
Contributing to the debate, the Chairman of the House Committee on Waterfront Infrastructure, Gbolahan Yishawu, described the FAAC facility as an advance-payment arrangement under the ISPO framework rather than conventional borrowing.
He said the programme would strengthen the state’s revenue profile because it attracted no interest, but stressed the need for the government to clearly identify the projects to be financed with the proceeds.
Yishawu also called for transparency to ensure the financing arrangement amounted to a restructuring of funding sources rather than an increase in the state’s overall budget.
Speaker of the House, Mudashiru Obasa, backed the borrowing plan, saying responsible borrowing remained necessary to fund capital projects and accelerate infrastructure development.
He explained that the increase in the proposed bond to N200bn reflected additional funding requirements and not a computational error.
Obasa added that the utilisation of the funds would remain subject to legislative oversight and approval to ensure accountability and prudent financial management.
Following deliberations, lawmakers unanimously adopted the committee’s recommendations with amendments, authorising the state government to participate in the FAAC Receivables Discounting Programme and proceed with the N200bn bond issuance.
The approvals pave the way for the state to finance major projects, including the New Massey Children’s Hospital, the Lagos Rail Mass Transit Line, Lagos Island General Hospital, Omu Creek Bridge and other strategic infrastructure projects.