By Abraham Olatokunbo
Debt Management Office ( DMO) on Monday flagged off it’s fourth SUKUK Bond Subscription offer of N250 billion for financing of road and other project constructions in Abuja and across the six geopolitical zones of the country.
The latest N250 billion brings the figure to N3.143 trillion domestic borrowing contained in 2021 budget.
According to the DMO, all of the domestic borrowing had been realised prior to now expect the N250 billion, whose offer was unveiled to both institutional and private investors at an investors’ forum in Abuja on Monday.
Addressing investors and selected group of journalists in Abuja, Director-General of DMO, Ms. Patience Oniha, revealed that unlike previous SUKUK Bond offer that had only Federal Ministry of Works and Housing as sole government’s agency to utilize proceeds for road construction, the present N250 billion has two other ministries- Federal Capital Territory ( FCT) and the Ministry of Niger Delta added.
She disclosed that the sum of N200 billion is allocated to Ministry of Works and Housing, FCT N37 billion and Ministry of Niger Delta Affairs N75 billion.
Some of the roads listed for construction by Ministry of Works and Housing, include, Abuja-Lokoja road section IV (Koton Karfi-Lokoja)); dualisation of Obajana junction to Benin Phase 2: Section 1 (Obajana junction to Okene); Construction of Oju/Loko-Oweto bridge to link Loko and Oweto with approach roads; Makurdi – Naka- Adoka- Ankpa road in Benue State:
Construction of Baro Port to Gulu town in Niger State and Reconstruction of Nasarawa -Loko road in Nasarawa State section amongst others.
The ministry has road projects to construct across the six geo political zones of the country.
For FCT, some of the road projects to be constructed with its share of N37 billion SUKUK include, to construct southern parkway from Christian Centre (S8/9) to ring road I (RR I); completion of roads B6, B12 & circle road, Abuja Central Area, rehabilitation and expansion of outer southern expressway from Villa Roundabout to OSEX/Ring Road 1 and (RR1) junction among others.
Under the Ministry of Niger Delta Affairs with N75 billion SUKUK proceeds will carry out dualisation Of East-West road (Section II-I) Port Harcourt-Ahoada, 47Km; dualisation of East-West road (Section II-II) Ahoada Kaiama 54Km; upgrading of 15km of section III from Port-Harcourt-Eleme Junction to Onne Port Junction amongst others roads to be constructed.
In an interview, Ms. Oniha gave an overview of current and previous SUKUK bond issuance by DMO.
She said: “The purpose of today’s event is to achieve two objectives- sensitize the media on issuance of fourth SUKUK as well as to invite investors within and outside Nigeria to tell them about sovereign SUKUK we are about to issue. By a way of background, the DMO had issued three sukuk previously- 2007, 2018 and 2020, raising a total of N362.57 billion to finance road projects across the six geo political zones of the country. That has been extremely successful and has both the DMO as the face of government for borrowing and others. The average citizen on the road has been impressed with what the sukuk has contributed to the economic growth and development.”
She added that: “It has now become one of the instruments with which we raised money for the federal government. Essentially, this event is , DMO on behalf of federal government is offering Sukuk of N250 billion to investors. Whether they be retail investors, institution or town associations, cooperative or banks. Whichever, insurance companies or pension funds. We are open. We are using Sukuk to raise money for the government to finance road projects. Sukuk is different from other securities we issued in the market. You know we issue Nigeria Treasury Bills, we issue government bonds . With these ones, we are financing specific projects. And under the requirements for issuing non interest products, we need to tell you what it’s we are financing.”
Oniha said: “For these ones, we have press session, investors’ meeting such as this. We tell you these are the projects we are going to finance, after you have been given money, give us time , you can come and see the project start. This is a sensitization event, a presentation to investors so they have opportunity to engage us. This is fourth one, the largest we are issuing so far. They are now three ministries – Ministry of works and Housing, Federal Capital Territory and Ministry of Niger Delta as supposed to one previously. The funds are all going into roads and projects.”
The DG DMO explained that the Sukuk is a ten years tenor with 12.80 percent coupon.
In his remark, Managing Director of Greenwich Merchant Bank, Mr. Bayo Rotimi Financial Adviser to the offer expressed confidence that the bond would be over subscribed.
