Nigeria moves to cancel $2bn London Club debt

[Richard Akindele]

Nigeria is now focused on off-setting the $2.15 billion (N301 billion) debt owed the London Club of creditors after successfully exiting the Paris Club, President Olusegun Obasanjo, told the Senate yesterday.

The Paris Club wrote off $18 billion of Nigeria’s debt after the country paid $12 billion in arrears in a celebrated debt cancellation deal.
“With the successful conclusion of the Paris Club debt deal, I wish to intimate you that we have now turned our attention to the London Club category of debts – made up of promissory notes, par bonds and associated oil warrants. The total amount outstanding is currently about $ 2.15billion.


“As these categories of debts are traded in the international markets, possessing different characteristics from Paris Club debts, a different approach is being adopted for their treatment.


“This is likely to take the form of a market-based transaction that will confer optimal financial and economic benefits to the country. We have invited proposals from reputable financial advisory services firms which will be competitively assessed to help us determine our strategic options. I will revert to the Senate as appropriate and will count on your support,� the president said in a letter dated May 24, presented to the Senate yesterday.


Obasanjo said the Paris Club debt deal cost Nigeria $12.12 billion out of the $12.4 billion appropriated by the National Assembly.
The balance, $276 million, would be returned to the excess crude account, the president said. “With this step, I am happy to say that we have now put the Paris Club debt behind us,� he added.

Obasanjo said the savings were as a result of the “proactive exchange rate risk management� by the Central Bank of Nigeria.
Commission of the transaction which he put at $30.24 million, was charged by the CBN at a reduced 0.25 per cent.

Obasanjo said the states owing the Paris Club had reimbursed the federal government of their share and thanked the Senate for supporting the debt deal.
Also in another letter dated May 30, Obasanjo asked the Senate to confirm the appointment of two commissioners into the Federal Character Commission.
The nominees are Alhaji Muhammad Bello Alkali from Kebbi state and Chief Meziem Echefu from Imo state.

Meanwhile, the Senate will today consider the harmonised version of the Electoral Bill 2006, which is to be the guiding principle for the conduct of the 2007 elections.
Senate’s spokesman, Senator Victor Ndoma-Egba, told newsmen yesterday that the conference committee set up by the Senate and the House of Representatives has ironed out the differences in the bill as passed separately by the two chambers.
The harmonised version, he said, would be presented to the Senate and considered today.
If the harmonised copy is adopted by the two chambers, a clean copy would be sent to Obasanjo for assent.

The Independent National Electoral Commission (INEC), said on Monday that it could not give a comprehensive election timetable until the bill is signed into law.

Source: Daily Trust