Babatunde Adejare
The Lagos State Government has begun a fresh search for prospective investors to raise an instrument of N50 billion, to enable it to achieve an extensive and sustainable waste management system.Specifically, the project bond which is funded by the state is a ten year concession plan which is going to run on a public-private partnership (PPP) basis. The programme called the Cleaner Lagos Initiative (CLI) comprises of various elements, which include waste collection, waste treatment, waste recycling and waste energy.
Speaking at a roundtable on the bond issuance to a large group of investors, the Commissioner, Ministry of Environment, Babatunde Adejare, said to support the efforts to achieve set goals, sustainable long term funding is needed at both the state and local levels.
But due to budgetary constraints, acknowledging the use of private sector finance, and adopting a PPP modem is key in order to deliver solid waste management infrastructure.
He explained that to create the funding for the CLI, Visionscape, an environment utility group alongside a strategic partner came up with a special purpose vehicle (SPV) called the Municipality Waste Management Contractors Limited (MWMCL).
According to Adejare, to raise finance for the SPV, the N50billion corporate bond, set up by Visionscape to finance the implementation of the CLI is divided in two tranches.
The launch of the first tranche at the roundtable over the weekend was pegged at an instrument of N27billion, and will run for a period of five years.The offer, which is open to investors for 10 working days is expected to begin from Monday, August 14 and ends at August 25 at 17.5 per cent fixed rate coupon.
The Cleaner Lagos Initiative, which will commence on September 1, 2017 has in the meantime started an intervention programme called, Operation Deep Clean, which is being implemented by the Ministry of Environment, Lagos Waste Management Authority (LAWMA), and Visionscape to rid the state of refuse heaps.
He further said a public utility levy (PUL) that will form the reform as a whole will be introduced. According to him, PUL will be a major contribution to the state’s on-going efforts to address severe challenges that are of need to Lagos as a result of rising organisation.
He said the money will not be paid into government’s account, but will be held in the environmental trust fund and managed meticulously by the independent board of trustees. The PUL, he said, are being subsidised by government for residential customers at an issue price of N1,000 per unit.
Optimistic that investors would key in into the initiative as the project is going to impact many lives, the Executive Director, Eczellon capital, Dipo Wintoki, who took the investors through a highlight of the CLI.
He acknowledged that the bond is a secured investment as it is guaranteed by the irrevocable standing payment order (ISPO) of Lagos State, which will be paid to the investors by the trustees who manage the sinking fund where the ISPO goes.
According to Wintoki, other benefit of investing in the initiative is interest payments are tax exempted with an increased 17.5 per cent fixed rate coupon, said the fund will enable the State Government achieve a cleaner Lagos initiative.
On how much has been invested by the state in the project, the commissioner said: “We are just trying to provide a level playing ground from investors that are coming. One needs to give them assurance that they will get back their money, and so we have a lot in terms of that.
“Private sector will be in control of the job while we will stand as monitors and policy makers that is what LAWMA will be doing. LAWMA will not be implementing those policies again. We can’t be policy makers and be the one implementing the policies.”
The CLI is a programme launched by the Lagos State Governor, Akinwunmi Ambode, to effectively manage waste collection and create over 27,500 jobs across the 37 local government areas in the state.
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