- Ambode Commits N30bn Sinking Fund to Transform Lagos Public Transport
In line with its plan to phase out the yellow buses, popularly known as ‘Danfo’ from Lagos roads, the state government said it is working towards setting aside a N30 billion sinking fund to transform public transportation.
Lagos State Governor, Akinwunmi Ambode, who said this during an interactive meeting with elect Editors in Lagos, disclosed that the aforementioned amount would help to instill credibility and confidence in a N100 billion public transportation bond that the state would float later in the year.
He said already, the state decided not to touch its share of the Paris Club refund of N14.5 billion, which has since been kept in the sinking fund. He also anticipated that the second batch of the Paris Club refund would be paid next month and eventually to take the sum to N29 billion, adding that his government would thereafter add another N1 billion to it to make it a total of N30 billion to kick start the initiative.
He explained: “We are working on the financial template and this is the breakdown – government has a sinking fund that we want to put into this bond. You are aware that the federal government paid the refund of the Paris Club Loan last December and this money belong to the state governments from the refund. Instead of spending it, Lagos State decided not to touch its share of the Paris Club refund and saved it to kick start the new transport initiative.”
“By the time we have N30 billion as a sinking fund to drive the bus initiative against the bond of N100 billion that we want to put into the market, there will be that credibility and credence that the bond will drive itself and that is the whole idea
“The second level of the initiative is that we intend to give out franchise to people and this franchise is going to come in multiple of 50 buses each, 100 buses, 200 buses and so on. So, if you have that franchise, you are going to give us a down payment of 25 per cent of the buses. So, these are bankable projects as we have a sinking fund and so our exposure as a government is just technically 75 per cent.”
He noted that public transportation is not a profitable business and that one is not likely to see major investors in it; that was why the state decided to use its vehicle – the LAGBUS, which is a private company to drive the proposed public transportation infrastructure bond.
“That bond is coming to the capital market in which every individual, every Lagosian should be interested in buying into the bond and then we believe that N100 billion bond that span for seven to ten years can take care of the structure that we have put in place.”
According to Ambode, from the kind of machinery his government wants to use to run the buses, there would be no cash takings, saying that everything would be automated and obviously who ever has a franchise, would have the recourse to take part of the money while part of the intake also goes to the repayment of the facility.