The federal government is set to borrow $170 million from the French Development Agency, FDA, to boost power transmission in the Federal Capital Territory, FCT.

The proposed loan was approved by the Federal Executive Council, FEC, during its weekly Wednesday meeting in Abuja.

Briefing correspondents after the meeting, the minister of Information, Labaran Maku, explained that FEC endorsed the loan sequel to a memo presented by the minister of Finance, Ngozi Okonjo-Iweala for a $170 million credit facility to beef up power infrastructure in the FCT.

“The loan, which is usually given on exceptionally concessionary grounds to developing countries and friendly countries by the French government, was taken to undertake 270 kilometres of transmission lines and the construction of additional sub-stations aimed at boosting power supply in the FCT,” he said.

According to him, when the French President, François Hollande, visited President Goodluck Jonathan last week for the centenary celebration, both leaders agreed on the need for the loan which is to support the power infrastructure Abuja, one of the fastest growing cities in the world.

“We need to continually update infrastructure, particularly power supply, to the city as it expands from the city centre outwards. We’re happy because this loan was taken and it shows the confidence of the French government in the Nigerian economy,” Maku added.

Okonjo-Iweala, who was also at the briefing, described the loan as a very soft credit.

According to her, the terms of the loan include 1.56% interest rate per annum, commitment charge of 0.5% per annum and a service charge of 0.25% per annum payable on the amount withdrawn.

“The loan is for 20 years with a seven years grace period, that means moratorium on payment for seven years and the rest payable over twenty years. The Ministry of Power has set forward an emergency transmission programme for the entire country requiring $1.9bn and we’ve been able to raise $1.2bn so far of very soft credits,” she said.

The Finance minister added: “This $170million from the French Development Agency is part of that package. The balance of the package comes from the World Bank, $700million and the Japanese $200million. We’ve been able to raise that, all very soft credits.”

She explained that the project had been approved in the borrowing plan since 2010, but that it was shelved until recently renewed by the French Development Agency.