July 31, 2011 / 8:02 PM / in 6 years

Nigerian oil state plans 250 bln naira bond issue

PORT HARCOURT, Nigeria, July 31 (Reuters) - One of the states in Nigeria’s oil-rich Niger Delta plans to issue a 250 billion naira ($1.63 billion) bond in October to fund infrastructure projects in the region, the state governor’s office said on Sunday.

A similar issue two years ago by Lagos State, the major commercial hub in Africa’s most populous nation, was well subscribed by investors.

“The Lagos State programme has been very successful and considering that Rivers (State) is second to Lagos in terms of revenue then they should have similar success with investors,” said Kayode Akindele, partner at Lagos-based advisory firm JMH-TIA Capital.

The funds raised will pay for projects around Nigeria’s oil-hub Port Harcourt, the press secretary to Rivers State Governor Rotimi Amaechi said.

These would include a city monorail, the first phase of a science and technology university, an entertainment complex, a city ring road and a highway to the region’s main airport.

Port Harcourt is the major city in the Niger Delta, the heartland of Africa’s largest oil and gas industry, but it lacks sufficient infrastructure and widespread traffic gridlock is common. The greater Port Harcourt region has a population of around 2 million.

“These long-term capital projects that are capable of catalysing the industrialisation and transformation of Rivers State require massive financial investment that can only be obtained from the capital market,” said Rivers State Commissioner for Finance Chamberlain Peterside.

“The proposed size of the first tranche of the bond will be about 100 billion naira with five years’ tenure, whereas the total bond programme of 250 billion naira is envisaged over the next several months.”

Corruption is a major problem in Nigeria and some well-funded infrastructure projects never get off the ground. Peterside said the finance ministry and debt management office would ensure transparent monitoring of the bond issue. ($1 = 153.000 Nigerian Nairas) (Reporting by Austin Ekeinde; Writing by Joe Brock)

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