Factual Pursuit of Truth for Progress
Cost of rentals for Sukuk bonds has soared from N8.17bn in the first quarter of 2022 to N33.13bn by the second quarter.
This implied a 305.51 per cent increase, according to an analysis of the Federal Government’s domestic debt service report for each quarter by the Debt Management Office.
According to Investopedia, Sukuk is a sharia-compliant bond-like instrument used in Islamic finance.
When an investor purchases Sukuk bonds, the Federal Government gives them a certificate of ownership.
The money is invested in assets across the country, with the investor having a partial ownership.
The Federal Government also makes a contract-binding promise to buy back the bond at a specific future date, and the investors receive respective rental income on their investments.
Speaking with our correspondent on the Sukuk in an earlier report, the DMO Director of Portfolio Management, Mr Oladele Afolabi, said although it was a non-interest loan, the government was expected to pay rents on the roads to the Sukuk investors during the tenure of the loan.
He said, “Government transfers its roads to Sukuk holders for that period. So, they become legal owners of that road. Government is now renting the roads from them so that citizens can travel on those roads.
“The government pays rent to the Sukuk holders based on an agreed rental rate payable every six months.”
The DMO DG, Ms Patience Oniha, has been reported as saying that “rental payments will be credited bi-annually, directly to the investors’ bank accounts as and when due.
At maturity, the principal investment will also be credited directly to the bank accounts specified by the investors in their application forms.”
Note that in December last year the Federal Government earned N1.77tn from Sukuk bonds between 2017 and 2021.
In a separate document on the website of the DMO titled ‘FGN Sukuk Rental Payment Dates’, it was disclosed that only one payment was made in Q1 2022, which was done on March 26.
However, three rental payments were made in Q2 2022, precisely on June 16, 28 and 29.
By Q3 2022 payment was to be paid in September, while three rental payments are expected in Q4 2022 in December