BAYELSA STATE GOVERNMENT OF NIGERIA · Bayelsa State Government of Nigeria. “Capital Assets” Capital Assets Limited. “CBN” Central Bank of Nigeria. “CITA” Company Income

Bayelsa State Government Bonds Due 2017 – Prospectus 1

This document is important and should be read carefully. If you are in any doubt about its content or the action to take, kindly consult your Stockbroker, Accountant, Banker, Solicitor or any other professional adviser for guidance immediately.“FOR INFORMATION CONCERNING CERTAIN RISK FACTORS WHICH SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS SEE “RISK FACTORS” ON PAGE 74-76” .INVESTMENT IN THE BOND IS STRICTLY FOR INSTITUTIONAL INVESTORS.

BAYELSA STATE GOVERNMENT OF NIGERIA

Offer for Subscription

N50 BILLION 13.75% FIXED RATE 7YEAR BOND ISSUE 2010/2017

Issue Price: N1,000 per unit

Payable in full on Application Application list Opens: June 30, 2010 Application list Closes: June 30, 2010

Lead Issuing House

Joint Issuing Houses:

RC: 223042 RC: 286096 RC: 499243

RC: 125097 RC: 444999

This Prospectus and the Securities that it offers have been approved and registered by the Securities & Exchange Commission. It is a civil wrong and criminal offence under the Investments and Securities Act No. 29 of 2007 (“the Act”) to issue a Prospectus which contains false or misleading information. The clearance and registration of this Prospectus and the Securities which it offers does not relieve the parties from any liability arising under the Act for false and misleading statements contained herein or for any omission of a material fact.

The registration of this Prospectus does not in any way whatsoever suggest that the Securities and Exchange Commission endorses or recommends the securities or assumes responsibility for the correctness of any statement made or opinion or report expressed therein.

This Prospectus is dated June 28, 2010


TABLE OF CONTENTS ABRIDGED TIMETABLE 3

PARTIES TO THE BOND ISSUE 6

DECLARATION BY THE ISSUER 12

SUMMARY OF THE BOND ISSUE 13

THE BOND ISSUE 16

TERMS AND CONDITIONS OF THE BOND ISSUE 17

MEMBERS OF THE BAYELSA STATE EXECUTIVE COUNCIL 20

NIGERIA OVERVIEW 26

DESCRIPTION OF THE ISSUER 32

EXTRACT FROM THE ISSUER’S RATING REPORT 46

EXTRACT FROM THE BOND ISSUE RATING REPORT 47

FINANCIAL FORECASTS 49

Letter from the Reporting Accountants 49

Memorandum on the financial projections 50

Bases and Assumptions 54

HISTORICAL FINANCIAL INFORMATION 62

Reporting Accountants Report 62

Statement of Accounting Policies 63

Statement of Asset and Liabilities 64

Statement of Consolidated Revenue Fund 65

Statement of Cashflows 67

Notes to the Accounts 68

RISKS & MITIGATING FACTORS 74

STATUTORY AND GENERAL INFORMATION 77

Statement of Indebtedness 77

Claims, Litigation & Disputes 77

Material Contracts 77

Relationship between the Issuer & Advisers 77

Costs & Expenses 77

Extracts of the Trust Deed 78

Consents 89

PROCEDURE FOR APPLICATION AND ALLOTMENT 92

RECEIVING AGENT 93

APPLICATION FORM 94


ABRIDGED TIMETABLE

DATE* ACTIVITY RESPONSIBILITY

30/06/10 Application List Opens/Disburse Underwritten Amount to BYSG ISSUING HOUSES

30/06/10 Application List Closes ISSUING HOUSES

02/07/10 Forward Allotment Proposal, Summary Reports and draft newspaper announcement to SEC

ISSUING HOUSES

09/07/10 Receive SEC clearance of allotment and registration of the Bonds ISSUING HOUSES

16/07/10 Publish Allotment Announcement in at least two(2) national dailies ISSUING HOUSES

16/07/10 Return excess/rejected application monies (if any) ISSUING HOUSES/REGISTRAR

23/07/10 Dispatch Bond Certificates/ Credit CSCS Accounts REGISTRAR

26/07/10 Forward Declaration of Compliance to The Exchange STOCKBROKER

30/07/10 List the Bonds on the Floor of The Exchange/Trading Commences STOCKBROKER

30/07/10 Forward Post Compliance Report to SEC ISSUING HOUSES

*These dates are indicative only and subject to change without prior notice.


Except where expressed otherwise, the following definitions apply throughout this document. “AGF” The Accountant General of the Federation or any public officer for the

time being in charge of the Federation Account in accordance with the Constitution of the Federal Republic of Nigeria.

“Allotment Date” Date on which the allotment of the Bonds is approved/cleared by the SEC.

“BGL” BGL Plc. “Bond Issue” or “the Offer” means the issuance of 50,000,000 bonds at Par with an aggregate

principal amount of N50,000,000,000 on the terms and conditions set out in this Prospectus.

“Bonds” The N50,000,000,000 13.75% Fixed Rate Development Bonds due 2017 issued under the terms and conditions of this Prospectus.

“Bondholders” or “Holders” Any person(s) (individual, joint or body corporate) registered in the register established and maintained for the purpose of this Bond Issue as a holder of the Bonds.

“Business Day” Monday to Friday excluding any day designated as a public holiday by the FGN.

“BYSG” or “the State” or “the Issuer”

Bayelsa State Government of Nigeria.

“Capital Assets” Capital Assets Limited. “CBN” Central Bank of Nigeria. “CITA” Company Income Tax Act Cap C21, LFN 2004. “Coupon Payment Date” Semi annually in arrears for every year that the Bond is outstanding i.e

June 30th and December 31st. “Coupon Rate” 13.75% per annum payable semi-annually in arrears “CSCS” Central Securities Clearing Systems Limited. “Dealers” The financial institution(s) appointed by the State from time to time to

exclusively purchase or underwrite and trade in the Bonds. “FBN Capital” or “Lead Issuing House”

FBN Capital Limited.

“Federation Account” The special account set up under Section 162(1) of the Constitution of the Federal Republic of Nigeria, 1999 into which is paid all revenues collected by the FGN to be distributed among the Federal, States and the Local Government Councils in each State, on such terms and in such manner as may be prescribed by the National Assembly.

“FGN” Federal Government of Nigeria. “GDP” Gross Domestic Product. “IGR” Internally Generated Revenue. “ISA”“ Investment & Securities Act, No. 29, 2007. “ISPO” The Irrevocable Standing Payment Order dated February 15, 2010 and

issued by the State’s Accountant-General to the Accountant-General of the Federation for the periodic deduction of monies from the State’s statutory allocation from the Federation Account and payment thereof into a Sinking Fund held by the Trustees by way of security for the Bonds.

“Issuing Houses” FBN Capital, BGL, Capital Asset, Skye Financial Services, Sterling Capital, Stanbic IBTC, UBA Capital and Vetiva Capital.

“Joint Issuing Houses” or “JIH” BGL Plc, Capital Asset Limited, Skye Financial Services Limited, Stanbic IBTC Plc, Sterling Capital Markets Limited, UBA Capital Limited and Vetiva Capital Management Limited.

“LFN” Laws of the Federation of Nigeria.


“Maturity Date” The date the Bond expires in 2017 i.e. 7 years from the date the

underwriters pay the firm underwriting commitment. “MTSS” Medium Term Sector Strategies “Mw” Megawatt. “Naira” or “N” The Nigerian currency. “Offer Period” means June 30, 2010 to June 30, 2010 or such other period as shall be

deemed expedient by the Issuing Houses provided that any extension of the offer period shall be subject to the approval of the Commission.

“PDP” People’s Democratic Party, a Nigerian political party “Pension Act” Pension Reform Act Cap P4, LFN 2004. “PFAs” Pension Fund Administrators. “Receiving Agents” Market operators authorized to receive Application Forms/monies from

investors for this Bond Issue. “Record Date” The date at which the list of Bondholders is extracted from the register

for the purpose of making coupon payments. “Registrar” Market operator authorized by the SEC and appointed by the Issuer to

maintain the register of Bondholders. “SEC” or the “Commission” Securities & Exchange Commission. “Sinking Fund”

The fund established pursuant to the provisions of Section 251 of the ISA and Section 1 of the Law to be administered by the Trustee on behalf of the Bondholders, for the purpose of effecting payment of coupon and principal obligations on the Bond Issue.

“Skye Financial Services” Skye Financial Services Limited “Stanbic IBTC” Stanbic IBTC Bank PLC. “State Debt Office” The Bayelsa State Debt Management Office set up in accordance with

the provisions of the Bayelsa State Debt Management Office Law, 2009 and is charged with managing the State’s debts.

“Sterling Capital” Sterling Capital Markets Limited. “The NSE” or “The Exchange” The Nigerian Stock Exchange. ‘The Bond Law” The Bayelsa State Bonds and Securities Law 2009 “The State Debt Office Law” The Bayelsa State Debt Management Office Law 2009. “Trustees”

First Trustees Nigeria Limited, Skye Trustees Limited and UBA Trustees Limited appointed by the Bayelsa State Debt Management Office to manage the Sinking Fund Account established for the Bond Issue.

“Trust Deed” Means the agreement dated June 28, 2010 appointing the Trustees to manage the Sinking Fund Account established for the purpose of the Bond Issue.

“Trustees Act” Trustees Investment Act Cap T22, LFN 2004. “UBA Capital” UBA Capital Limited “Underwriting Agreement” Means the agreement made between the Issuer and the Underwriters,

to fully underwrite the Bonds on a firm basis. “Underwriters” FBN Capital, United Bank for Africa, BGL, Capital Asset, Skye Bank,

Stanbic IBTC, Sterling Bank and Vetiva Capital. “USD” or “US$” The United States Dollar “VAT” Value Added Tax “Vetiva Capital” Vetiva Capital Management Limited


PARTIES TO THE BOND ISSUE

The Issuer: The Bayelsa State Government

Bayelsa State Secretariat Yenagoa Bayelsa State

Representatives of the State Executive Council

His Excellency Chief Timipre Sylva Executive Governor and Chairman, State Executive Council Hon. Gideon Ekeuwei Secretary to the State Government Rev. Obegha Julius Oworibo Head of Service Mr. Anthony George-Ikoli (SAN) Honourable Commissioner for Justice & Attorney General Dr. Silva Opuala-Charles Honourable Commissioner for Finance & Budget Dr. Eruani Azipabu Godbless Honourable Commissioner for Health Chief. Josephine Ezonbodor (JP) Honourable Commissioner for Education Engr. Emmanuel Frank-Opigo Honourable Commissioner for Works & Transport Hon. Maxwell Oko Honourable Commissioner for Energy Chief. Kuroghoekegha, Davidson Francis Honourable Commissioner for Water Resources Mrs. Victoria P. Denenu Honourable Commissioner for Environment Chief Diekivie B. Ikiogha Honourable Commissioner for Agriculture Hon. Dudafa Waripamo-Owei Honourable Commissioner for Local Government & Rural Development Mr. Kenigua Ibomo Robert Honourable Commissioner for Commerce & Industry Elder Bethel Amabebe Honourable Commissioner for Sports Development



Mr. Etifa Bekeakpo Honourable Commissioner for Youth, Conflict Resolution & Employment Generation. Ms. Oru Ebapregha Dora Honourable Commissioner for Gender & Social Development Hon. John D. Iyekoroghe Honourable Commissioner for Special Duties (Central) Chief Benneth Owei-Zala Honourable Commissioner for Special Duties (East) Mr. Stephen Ogullah Honourable Commissioner for Special Duties (West) Mr. Kesiye Frank-Oputu Honourable Commissioner for Special Duties (Governor’s Office)

Solicitor to the State Government

Mr. Anthony George Ikoli (SAN) The Attorney General of Bayelsa State Ministry of Justice Bayelsa State Secretariat Yenagoa Bayelsa State

Auditor-General to the State Government:

Mr. A. A. Assayomo Esq. Bayelsa State Secretariat Yenagoa Bayelsa State

Acting Accountant-General to the State Government:

Mr. Francis Okokuro Bayelsa State Secretariat Yenagoa Bayelsa State

Lead Financial Adviser/Lead Issuing House/Lead Underwriter:

FBN Capital Limited 16, Keffi Street South West Ikoyi Lagos State

Joint Issuing Houses: BGL Plc 12A Catholic Mission Street Lagos Island Lagos State

Capital Assets Limited Bookshop House 50/52, Broad Street Lagos State

Skye Financial Services Limited Plot 287, Ajose Adeogun Victoria Island Lagos State



Stanbic IBTC Bank PLC I.B.T.C. Place Walter Carrington Crescent Victoria Island Lagos State Sterling Capital Markets Limited Plot 1B Frajend Close Osborne Foreshore Estate Ikoyi Lagos State UBA Capital Limited 57, Marina Lagos State Vetiva Capital Management Limited Plot 266B, Kofo Abayomi Street Victoria Island Lagos State

Joint Underwriters: BGL Plc 12A Catholic Mission Street Lagos Island Lagos State Capital Assets Limited Bookshop House 50/52, Broad Street Lagos State Skye Bank Plc 3, Akin Adesola Street Victoria Island Lagos State Stanbic IBTC Bank PLC I.B.T.C. Place Walter Carrington Crescent Victoria Island Lagos State Sterling Bank Plc Sterling Towers Marina Lagos United Bank for Africa Plc UBA House 57 Marina Lagos State



Vetiva Capital Management Limited Plot 266B, Kofo Abayomi Street Victoria Island Lagos State

Joint Trustees: First Trustees Nigeria Limited 2nd Floor, AG Leventis Building 42/43 Marina Lagos State Skye Trustees Limited Skye Bank House Plot 5, Commercial Scheme Alausa, Ikeja Lagos UBA Trustees Limited UBA House 57 Marina Lagos State

Joint Solicitors to the Offer: Banwo & Ighodalo 98, Awolowo Road South-West Ikoyi Lagos State G.Elias & Co NCR Building (6th Floor) 6 Broad Street Lagos State

Solicitors to the Trustees: George-Ikoli & Okagbue 864B, Bishop Aboyade Cole, Victoria Island Lagos State

Reporting Accountant: Akintola Williams Deloitte 235 Ikorodu Road Ilupeju Lagos State

Lead Stockbroker: FBN Securities Limited 16, Keffi Street South West Ikoyi Lagos State



Joint Stockbroker: BGL Securities Limited

12A, Catholic Mission Street Lagos Island Lagos State Lead Securities and Investments Limited 280 Ajose Adeogun Street Victoria Island Lagos State MACT Securities Limited 72 Norman Williams Crescent Off Ribadu Road Ikoyi Lagos State Standard Alliance Capital & Asset Management Limited 9 Younis Bashorun Street Off Ajose Adeogun Street Victoria Island Lagos State Strategy & Arbitrage Limited Bull Plaza 38/39 Marina Lagos State UBA Stockbrokers Limited UBA House 57 Marina Lagos State Vetiva Securities Limited Plot 266B, Kofo Abayomi Street Victoria Island Lagos State

Registrars: First Registrars Nigeria Limited Plot 2, Abebe Village Road Iganmu Lagos State

Rating Agency: Agusto & Co UBA House (5th Floor), 57 Marina, Lagos-Island Lagos State

Joint Receiving Banks/Paying Agents:

First Bank of Nigeria Plc Samuel Asabia House 35, Marina Lagos State



Skye Bank Plc 3, Akin Adesola Street Victoria Island Lagos State United Bank for Africa Plc UBA House 57 Marina Lagos State


DECLARATION BY THE ISSUER


SUMMARY OF THE BOND ISSUE This summary information should be read in conjunction with the full text of this Prospectus, from where it is derived. The information below is a brief summary of the key features and summarized terms and conditions of the proposed Bond Issue. Issuer: Bayelsa State Government

Description: 13.75% Fixed Rate Development Bond Issue due 2017

Bond Size ₦50,000,000,000 (Fifty Billion Naira) Currency: Nigerian Naira (₦) Issue Price: N1,000 being 100% of Par Value Number of Bonds: 50,000,000 (Fifty Million Bonds)

Lead Issuing House/Underwriter:

FBN Capital Limited

Joint Issuing Houses/Underwriters:

BGL Plc Capital Asset Limited Skye Financial Services Limited Stanbic IBTC Bank PLC Sterling Capital Markets Limited UBA Capital Limited Vetiva Capital Management Limited

Method of Issue: Offer for Subscription

Units of Sale: Minimum of 1,000 units and multiples of 100 units thereafter

Coupon Rate: 13.75% per annum

Tenor: 7 years

Offer Opens: June 30, 2010

Offer Closes: June 30, 2010

Coupon Payment: Semi annually in arrears for every year that the Bond is outstanding i.e June 30th and December 31st. Initial coupon shall be paid on June 30th or December 31st which ever date comes first from the date the issuer receives the underwriting commitment.

Coupon Commencement Date:

Coupon on Bond will accrue from the date the underwriters pay the firm underwriting commitment to the Issuer.

Maturity Date: Seven years from the Coupon Commencement Date.

Principal Repayment: Bullet repayment of Principal on Maturity Date

Redemption: Redeemable at par

Business day Convention: Modified Following: Where a Coupon Payment Date falls on a non-Business Day, such payment shall be postponed to the next day which is a Business Day provided that if such a Business Day falls into the next calendar month, such Coupon Payment Date shall be brought forward to the immediately preceding Business Day.

Day Count Fraction: Actual/Actual: Coupon will be calculated on the basis of the actual number of days (365 or 366) in each year.

Issuer Rating: Bb- (Rating by Agusto & Co.) May 2010

Bond Rating: A- ( Rating by Agusto & Co.) May 2010

Security: Security for the repayment of principal and coupon in relation to the Bond shall be held by the Trustee and shall be the ISPO issued to the Office of the Accountant General of the Federation as a first line charge upon and payable out of the Statutory Allocation of the State. Deductions from the State’s Statutory Allocation shall be made in an amount equal to the principal and interest payable by the Issuer in respect of the Bonds into a Sinking Fund held by the Trustee as set out in the Trust Deed.


Use of Proceeds:

The estimated net issue proceeds of N46,484,550,000 after the deduction of Offer cost of N2,017,465,000 i.e. 4.03% and Underwriting cost of N1,500,000,000 i.e. 3%(i.e. a total of N3,517,465,000 representing 7.03% ) of the gross issue proceeds will be utilised for the repayment of existing obligation to the underlisted lenders who part-financed the Projects hereunder.

Obligation 30/6/2009 Proposed Repayment

Lender (N'000) (N'000)

Equatorial Trust Bank 4,986,107 3,540,944.05

Bank PHB 3,977,465 2,824,644.76

Intercontinental Bank Plc 265,827 188,780.25

First Bank of Nigeria Plc 56,226,857 39,930,180.94

Multilateral debts 3,708,060 ‐

World Bank 2,243,221 ‐

Total 71,407,537 46,484,550.00

The status of the projects are:

No Project Total Project

Cost (N) Project Cost to

Date (N) Project Cost to Completion (N)

% of Comple-tion

**Proposed Completion Date

1

Extension of Yenagoa Water Reticulation System in Igbogene 567,076,000 482,014,600 85,061,400

85%

Dec. 2010

2

Construction of Gateway from East-West Link Road to Yenagoa 6,041,000,000 5,041,000,000 1,000,000,000

83%

*9 months

3

Construction of 500 Bed Space General Hospital, Yenagoa 5,620,000,000 2,300,000,000 3,320,000,000

41%

June 2011

4 31 Mw & 3 X 20 Mw Imiringi and Etelebou Gas turbines 14,501,668,537 12,670,156,014 1,831,512,523

87%

* 9 months

5 Construction of Yenagoa Galleria 5,472,989,917 2,227,161,010 3,245,828,907

41%

June 2011

6 Construction of 3 Senatorial Secondary Schools 6,012,011,803 1,382,762,714 4,629,249,089

23%

August 2010

7 Tower Hotel Project 13,839,475,000 3,600,000,000 10,239,475,000

26% June 2011

8 Central Business District 25,419,701,788 13,690,000,000 11,729,701,788

54% June 2012

9

Construction of Central Senatorial Road: Yenagoa-Oporoma 44,146,000,140 4,340,000,000 39,806,000,140

10%

* 52 months

10 Construction of West Senatorial Road: (Phase 1) 8,000,000,000 4,200,000,000 3,800,000,000

53% *36 months

Total 129,619,923,185 49,933,094,338 79,686,828,847

* The number of months required to complete the project from the date of receipt of the required funding to completion from the State.

Sinking Fund: A Sinking Fund has been created in accordance with the provisions of the Bond Law and the ISA. This Sinking Fund shall be funded from the Statutory Allocation by way of the ISPO and shall be jointly administered by the Trustees.

Quotation: An application has been filed with the Council of the Exchange for the admission of the Bonds to the Daily Official List of the Exchange.

Tax Qualification: All payments made to Bondholders shall be free and clear of Withholding, State and Federal income and Capital Gains Taxes with no deduction made whatsoever at source.


Underwriting: The Bond shall be 100% underwritten on a Firm Basis as follows:

Name of Underwriters Amount Underwritten (N’000)

%

FBN Capital Limited 30,000,000 60.00%

Stanbic IBTC Bank PLC 4,000,000 8.00%

United Bank for Africa Plc 3,500,000 7.00%

Skye Bank PLC 3,500,000 7.00%

BGL Plc 3,000,000 6.00%

Capital Assets Limited 3,000,000 6.00%

Sterling Bank Plc 2,000,000 4.00%

Vetiva Capital Management limited 1,000,000 2.00%

Total 50,000,000 100%

Joint Trustees: First Trustees Nigeria Limited Skye Trustees Limited UBA Trustees Limited

Form of Bonds The Bonds will be issued in registered form and shall be freely transferable in accordance with the provision of the Trust Deed.

Basis of Allotment The Basis of Allotment will be prepared by the Issuing Houses for the ratification of the Issuer and submitted to SEC for clearance.

Indebtedness of the State

As at June 30, 2009, the total loans and overdraft of the State was N71,407,537,000.00. Other than as stated above, the State had no outstanding debentures, mortgages, loans, charges or similar indebtedness, other than in the ordinary course of governance.

Summary of Claims & Litigation

The State is currently involved in fifty Four (54) civil litigation matters instituted against the State, which involve claims of at least N5,000,000 (Five Million Naira). The total amount claimed in these matters is approximately N10,054,737,358.11 (excluding interest), while the total sum counterclaimed by the State is approximately N245,270,096.52(excluding interest). The Joint Solicitors to the Offer are of the opinion that the State’s actual liability in the 54 cases will be as eventually established, found and determined by the Courts, upon conclusion of the matters. However, based on their consideration of the merits of the cases, their experience in litigation matters and their understanding of the disposition of Nigerian courts in awarding damages, the Joint Solicitors to the Offer are also of the opinion that majority of the sums claimed in the foregoing cases are exaggerated and would most likely be unsubstantiated.

Pursuant to the forgoing, the Joint Solicitors to the Offer are of the opinion that the liability that may accrue to the State from the cases reviewed by them would not have any material adverse effect on the Offer.

The members of the State’s Executive Council are of the opinion that the aforementioned cases are not likely to have any material adverse effect on the state and or the Offer.

Status: • The Bonds qualify as securities in which Pension Fund Administrators may invest under the Pension Reform Act, Cap P4, LFN 2004; and

• The Bonds qualify as securities in which Trustees may invest under the Trustee Investment Act Cap T22 LFN 2004 subject to the listing of the Bonds on the Nigerian Stock Exchange.

Qualified Investors: This Offer is restricted to Qualified Institutional Investors and High Net-worth Individuals as defined by the SEC Rules and Regulation 78(c)(2).

Governing Law The Laws of the Federal Republic of Nigeria


THE BOND ISSUE

A copy of this Prospectus and the documents specified herein has been delivered to the Securities & Exchange Commission for clearance and registration.

This Prospectus is being issued in compliance with the provisions of the Investments and Securities Act No. 29, 2007, the Rules and Regulations of the Commission and the Listing Requirements of The Exchange and contains particulars that are in compliance with the requirements of the Commission and The Exchange, for the purpose of giving information to the public with regard to the ₦50,000,000,000 13.75% Fixed Rate Development Bond Issue due 2017 by the Issuing Houses specified herein on behalf of the Bayelsa State Government of Nigeria.

The Issue Price is 100% of the Par Value of the Bonds. The Coupon on the Bonds will be payable semi-annually in arrears in equal instalments at the rate of 13.75% per annum six months from the date of allocation of the bond in each year till the Maturity Date of the Bonds. Payments of Principal of, and Coupon on, the Bonds will be made without withholding or deductions for, or on account of any State and Federal income and capital gains taxes in the Federal Republic of Nigeria. An application has been made to the Council of The Exchange for the admission of the Bonds to the Daily Official List (Bonds) of The Exchange.

The Bayelsa State Executive Council collectively and individually accepts full responsibility for the accuracy of the information contained in this Prospectus and have taken reasonable care to ensure that the facts contained herein are true and accurate in all respects and confirm, having made all reasonable enquiries that to the best of their knowledge and belief, there are no other material facts the omission of which would make any statement herein misleading or untrue.

Lead Issuing House:

Joint Issuing Houses:

RC: 223042 RC: 286096 RC: 672560 RC: 444999

RC: 125097 RC: 449243 RC: 485600

On Behalf of

BAYELSA STATE GOVERNMENT OF NIGERIA Offer for Subscription

and are authorized to receive subscription for

N50 Billion 13.75% Fixed Rate 7year Bond Issue By Bayelsa State Government Issue Price: N1,000 per unit

Payable in full on Application Application list Opens: June 30, 2010 Application list Closes: June 30, 2010

Statement of Indebtedness: As at June 30, 2009, the total loans and overdraft of the State was N71,407,537,000.00. Other than as stated above, the State had no outstanding debentures, mortgages, loans, charges or similar indebtedness, other than in the ordinary course of governance. Extract from the Reporting Accountant: The reporting accountants were unable to confirm the existence and valuation of cash and bank balances totalling N16.10billion in 2004, N17.97billion in 2005, N0.79billion in 2006, N2.21billion in 2007, N2.53billion in 2008 and N18.24billion as at 30 June 2009. We were also unable to determine the existence, ownership and valuation of investments as some share certificates and CSCS statements (for quoted investments) were not available for verification.


TERMS AND CONDITIONS OF THE BOND ISSUE 1. Amount of Bonds

The Aggregate principal amount of Bonds issued pursuant hereto is N 50,000,000,000 (Fifty Billion Naira) comprising 50,000,000 registered Bonds at N 1,000 (One Thousand Naira) per unit.

2. Type of Bonds

Fixed Rate Bonds. 3. Status of Bonds

The Bonds constitute senior and direct obligations of the State. The Bonds are not guaranteed by the Federal Government of Nigeria. The Bonds qualify as securities in which trustees and pension fund administrators may invest under the Trustees Investment Act Cap. T22 LFN 2004 and the Pension Reform Act Cap P4 LFN 2004 respectively. The Bonds are also acceptable pledging collateral for accessing CBN Expanded Discount Window obligations. The Bonds qualify as “Government Securities” within the meaning of CITA and PITA, for purposes of tax exemption.

4. Minimum Subscription

The minimum subscription amount for the Bonds is 1,000units or N1,000,000.00 and multiples of 100 units or N100,000.00 thereafter.

5. Tax Considerations

The Bonds shall be exempt from all forms of taxation in the Federal Republic of Nigeria. Accordingly, all payments made to Bondholders shall be free and clear of withholding, or any deductions at source or otherwise and/or State and Federal income and capital gains or other taxes.

6. Tenor

(Seven) 7 years 7. Events of Default and Remedies

An event of default (“Event of Default”) shall be triggered if the Issuer fails to pay or fails to cause to be paid, when due, or declares a moratorium on the payment of, or to repudiate any of the Bonds issued. The Trust Deed sets out detailed Events of Default and remedial procedures available to the Trustee acting on behalf of Bondholders.

8. Payments

Interest and principal payments in a specified currency will be made by credit to the bank account of the Bondholder as specified on the applicable application form. No additional Interest will be paid on any amounts withheld. The Bondholder shall be the only person entitled to receive payments in respect of the Bonds and the Issuer will be discharged by payment to, or to the order of, the Bondholder in respect of each amount so paid.

9. Coupon Payment

(i) The Coupon shall be payable semi-annually in arrears in equal payments on each Coupon Payment Date up to and including the Maturity Date.

(ii) Initial coupon shall be paid on June 30th or December 31st which ever date comes first from the date the issuer receives the underwriting commitment.

(iii) The Coupon rate payable on the Bonds shall be 13.75% fixed rate per annum (“Coupon Rate”).

(iv) The Trustees shall apply the monies in the Sinking Fund Account for Coupon Payments to the Bondholders on the Coupon Payment Dates.

TERMS AND CONDITIONS OF THE BOND ISSUE


10. Redemption and Purchase

Redemption at Maturity (i) The Bonds will be redeemed at their principal amount plus accrued but unpaid coupon on

the Maturity Date. (ii) The Aggregate principal amount and any Coupon (accrued up to but unpaid as of the

Maturity Date) shall be paid in one bullet payment on the Maturity Date. (iii) The Bondholders will present to the Registrar proper identification/authorisation forms

evidencing their beneficial ownership in the Bonds. Upon the determination and verification of the beneficial ownership, the Issuer will repay the par value of the Bonds plus coupon accrued but unpaid from the last Coupon Payment Date. The proceeds of such redemption will be transferred to the account indicated by the Bondholder by the Paying Agent acting on behalf of the Issuer and the Trustees.

11. Clearing and Settlement

The CSCS shall act as the Depository and Clearing Agent for the Bonds issued in dematerialised form. The CSCS will be responsible for maintaining the book-entry accounts for the Bondholders and/or Dealers named in the Prospectus having interests in the Bonds. Each Dealer will be a CSCS Participant. If

(a) the book-entry system ceases to exist (b) the Issuer determines that the CSCS is no longer willing or able to discharge its

responsibilities as depository with respect to the Bonds and the Issuer is unable to locate a qualified successor, or

(c) the Bondholders at their option elect, or the Issuer is required by applicable law or the rules of any securities exchange, to withdraw the Bonds from the book-entry system, then physical certificates will be issued to Bondholders thereof or their nominees.

12. Form, Denomination and Transfer

(i) The Bonds will be issued in registered form and shall be subject to a Prospectus prepared on behalf of the State by duly appointed Issuing Houses, in which the terms set forth may supplement or vary any of these Conditions. The Bonds shall be a Fixed Rate Development Bond.

(ii) All allotments for the Bonds shall be in physical certificates except otherwise waived by a Bondholder in favour of electronic allotments by formal application. Upon allotment and entry of the name of such allottee in the Register of Bondholders, the Issuer, the Trustees and the Registrars will (except as otherwise required by law and the Trust Deed) deem and treat such registered holder of the Bonds as the absolute owner thereof (notwithstanding any notice of ownership or trust thereon or notice of previous loss or theft thereof) for the purpose of making payments and for all other purposes.

(iii) For as long as a holding of the Bonds is represented in electronic form with the Central Securities Clearing System (“CSCS”), a CSCS Statement shall be conclusive and binding for all purposes as definitive evidence of the person(s) shown in the records of CSCS as the holder of a particular nominal amount of such Bonds standing to the credit of the account of such person, save in case of manifest error and the holder thereof shall be treated by the Issuer and the Trustees as the holder of such nominal amount of such Bonds.

(iv) The Bonds will have the right of survivorship in accordance with the provisions of the ISA. Organisations or trusts which are not incorporated should complete their application in the full name(s) of the partner(s) or trustee(s). No notice of any trust in respect of any Bonds will be entered in the register or receivable by the Registrars.

(v) Transfers of beneficial interest in the Bonds will be effected in accordance with the provisions of the Trust Deed, the ISA and the Law. The Bonds may be transferred in whole or in part and in the authorised denominations set out in the Prospectus. In order to effect any such transfer, the holder or holders must

TERMS AND CONDITIONS OF THE BOND ISSUE


(a) lodge the Bonds for transfer at the specified office of the Registrars and (b) complete and deposit the instrument of transfer in respect thereof duly

executed by the holder or holders thereof or its or their attorney or attorneys duly authorised in writing at the specified office of the Registrars and upon payment of the prescribed fee (if any).

The Registrars, being satisfied with the documents of title and identity of the person making the request, shall effect the transfer and post a written notice of receipt of an application of transfer to the registered holder in whose name the application is made.

(vi) Each Bond issued shall be registered on the Register. Any transfer of Bonds shall be effective only to the extent that such transfer is registered in the Register, by the Holder or transferee thereof in person or by his attorney duly authorised in writing, upon presentation and surrender of the Bond Certificate together with a written instrument of transfer in a form satisfactory to the Registrar and in compliance with the Law duly executed by or on behalf of the registered Holder and the transferee by a duly authorised attorney. Upon surrender of the aforesaid documents to facilitate the registration of transfer of any Bond, the Registrar shall if the above stated conditions are met, register such transfer, and deliver a new Bond Certificate(s) to the transferee as appropriate.

(vii) In case of the death of a registered Bondholder, the survivors or survivor where the deceased was a joint holder, and the executors or administrators, of the deceased where he was a sole or only surviving holder, shall be the only persons recognised by the State as having any title to such Bond.

(viii) Any person becoming entitled to the Bond in consequence of the death, bankruptcy, winding-up or dissolution of the holder thereof may, upon producing such evidence that he sustains the character in respect of which he proposes to act under this condition or of his title as the State or the Registrars shall think sufficient, be regarded himself as the holder of such Bond, or subject to the preceding conditions as to transfer may transfer the same. The State shall be at liberty to retain the interest payable upon any Bond which any person entitled to transfer under the preceding condition until such person shall be registered or duly transfer the same as aforesaid.

13. Notices (i) Any notice, request, requirement, stipulation or other document or matter to be given,

issued or made under this Deed shall be in writing and shall be signed by the person giving, issuing or making it or that person's authorised agent or representative and shall be served in accordance with Paragraph 14 (ii) below.

(ii) Any notice or other document referred to in Paragraph 14 (i) above, shall be served by personally delivering the same by hand to the registered office or to the address of the person to be served as specified in this Deed or previously notified for this purpose, or by sending the same by a reputable courier service to such address or by dispatching the same by legible facsimile transmission or other means of communication in permanent written form, and due service shall be deemed to have been made at the time of actual receipt, save that in the case of any facsimile transmission sent after 4.30 pm, it shall be deemed to have been served at 9.00 am on the next Business Day.


MEMBERS OF THE BAYELSA STATE EXECUTIVE COUNCIL

The State has an Executive Council, which comprises the State Governor, the Commissioners, Secretary to the State Government, Head of Service and such other government officials as are invited into the Executive Council by the Governor.

The profiles of the members of the State Executive Council are provided thus:

Chief Timipre Sylva – His Excellency, the Governor of Bayelsa State His Excellency, Chief Timipre Sylva was born on the 7th of July 1964 in Okpoma, Brass Local Government Council Bayelsa East Senatorial District. He started his primary education at St. Paul's Anglican Primary School, Okpoma and finished at Ajeromi Central School 1, Lagos in 1976. His secondary education took him to Government Secondary School, Twon, Brass from 1976 - 1981. Thereafter, he secured admission into the University of Port Harcourt in 1982, where he obtained a Bachelors degree in English Studies/Linguistics in 1986. For the mandatory National Youth Service Corps Programme, he served with Shell Petroleum Development Company at Warri, Delta State. In 1991, Chief Sylva was elected to the old Rivers State House of Assembly on the platform of the then National Republican Convention (NRC). He went into business briefly and soon returned to politics when the ban on politics was lifted. As one of the founding members of the United Congress Party (UNCP), Sylva became the party’s State Financial Secretary. Sylva joined the Peoples Democratic Party (PDP) at the inception of the Fourth Republic in 1999. He was appointed Political Adviser to then Governor of Bayelsa State, Chief Diepreye Alamieyeseigha, and then Special Assistant to former Minister of State for Petroleum Resources, Dr. Edmund Daukoru, after resigning as aide to the former governor in 2002. Chief Sylva was also a member of the Governing Council of Federal University of Agriculture, Umudike, Abia State, until 2004. Chief Timipre Sylva won the gubernatorial election and succeeded Goodluck Jonathan on May 29, 2007. Although an Appeal Court judgement annulled the election in April 2008, Chief Slyva in demonstration of his popularity among his people won the governorship rerun election that was ordered by the court, and was sworn-in as Governor of Bayelsa State on May 27, 2008. In the spate of two years, the Government of Timipre Sylva created the Bayelsa State Infrastructural Development Agenda and completed some of the projects under the first phase of the programme. The projects include Gloryland Castle which is a new government lodge, a new gas turbine, and the Peace Park, among others. The second phase of this development agenda includes: the development of agriculture, especially rice production which will be for export and local consumption and oil palm development in collaboration with foreign organizations and agencies. Gideon Ekeuwei - Secretary to the State Government (SSG) Hon. Gideon Ekeuwei holds a Bachelor of Education degree and a Masters degree in Political Science from the University of Port Harcourt in 1989 and 2007 respectively. He was elected into the Rivers State House of Assembly in 1992. He was appointed Executive Chairman Environmental Sanitation Authority in 2000; Commissioner for Special Duties (Governor's Office) in 2003; and Secretary to the State Government on 6th June 2008. Hon. Gideon Ekeuwei is a member of the Nigerian Environmental Society. Obegha Julius Oworibo – Head of Service Mr. Oworibo, a native of Okpoama, Brass Local Government Area holds Bachelors Degree B. Sc(Hons) in Political Science from University of Lagos in 1983 and a Post Graduate Diploma in Public Administration in 2000 from University of Calabar. He holds a Certificate of Membership of the National Institute for Policy & Strategic Studies, Kuru in 2001. Mr. Oworibo also became a member of the Institute of Personnel Management of Nigeria in 2002. He started his working career as teacher on posting for the mandatory Youth Service at Government Secondary/Commercial School in 1983 after which he joined the Rivers State



Civil Service as an Assistant Executive Office (Audit) in 1984. He was promoted to the post of Administrative/Personnel Office in 1986 from where he was appointed the Secretary, Rivers State Projects Monitoring & Implementation Committee, Port Harcourt in 1993. He became the head of the team that supervised the Special Projects – Schools in renovation in Ogoni land in 1995. On the creation of Bayelsa State, Mr. Oworibo was employed as the Pioneer Principal Secretary, Government House Yenagoa in 1996 and Head of Personnel Department, Governor’s Office, Yenagoa in July 1998. He was appointed Chairman Caretaker Committee, Ogbia Local Government in April 1998 and Permanent Secretary, Bayelsa State Civil Service with effect from October 1998. He was then moved to the Office of the Head of Service as the Permanent Secretary from 1999-2004. He was transferred to the Office of the Secretary to the State Government as the Permanent Secretary (General Services) and was appointed Head of Service on December 28, 2009 Anthony George-Ikoli (SAN) – Honourable Commissioner for Justice & Attorney General Mr. George-Ikoli (SAN) holds a Bachelor of Law degree from the University of Ife (now Obafemi Awolowo University, Ile-Ife) (1980) and was called to the Nigerian Bar in 1981. He started his career as an Associate Counsel, Commercial Litigation at Bentley, Edu, Adelakun & Co from 1982-1987. He later became a Partner in charge of Litigation from 1987-1996 in Bentley Edu (in association with Irving & Bonnar Legal Practitioners). Prior to his appointment as the Attorney General & Commissioner for Justice Bayelsa State in July 2007, he was the Senior Partner, George Ikoli & Okagbue, Legal Practitioners, Notaries Public from July 1996-June 2007. Silva Opuala-Charles – Honourable Commissioner for Finance & Budget Dr. Opuala-Charles holds a Bachelors degree in Economics (1995), a Masters’ of Science degree in Economics (Money & Banking) (1998) and a PH.D in Economics (Monetary Economics) (2005) from the University of Port Harcourt. He is an Associate member of the Nigerian Institute of Management (2006), and Member, Board of Patrons, Institute of Strategic Management of Nigeria. He started his career in 1988 at United Bank for Africa Plc where he rose to the position of Supervisor, Foreign Exchange Desk. He then joined EMB Mortgage Finance Limited in January 1993 as Assistant Manager, Treasury and left as the Manager, Banking & Treasury in October 1996. He was a Relationship Officer at Equitorial Trust Bank Limited from April 1998-March 1999 and then joined First Atlantic Bank Plc as Assistant Manager, Head, Oil & Gas in November 1999, Branch Manager, Warri Branch in April 2001 and Regional Manager, South-South from November 2003 to January 2006. He became the Regional Manager, Port Harcourt First Inland Bank Plc from February 2006 to July 2007 and was appointed Honourable Commissioner for Finance & Budget. Eruani Azibapu Godbless - Honourable Commissioner for Health Dr. Eruani holds a Bachelor degree in Medicine and Surgery from the College of Medicine, University of Port- Harcourt in 1999. He participated in the National Youth Service scheme in 2002. Dr. Eruani started private medical practice in 2003 and his clients include Nigeria Agip Oil Company, Chief Melford O. Okilo (first Civilian Governor of Old Rivers State) and a host of notable organizations and individuals. In 2005, he was appointed Special Assistant to Sen. Melford Okilo on logistics and strategy and became Special Adviser for Community Health and HIV/AIDS to the Governor of Bayelsa State in 2006. Dr. Eruani was appointed Commissioner for Health in August 2007. Josephine Ezonbodor (JP) - Honourable Commissioner for Education Mrs. Josephine Ezonbodor was educated in Saint George’s Primary School Falomo Lagos. She attended African Grammar School, Azoro between 1966 and 1973. In 1979 she obtained a National Certificate in Education (English/History) and a Bachelor of Education (B.Ed) degree in English in 1984 from Rivers State College of Education. In 2001, she proceeded to the University of Benin where she obtained a Masters Degree in English Language. Her work experience was mainly teaching. As a teacher, she taught English



Language at various levels and schools from 1980 to 2002, before she resigned into private business. A High Chief of Kobowei Clan and Justice of the Peace, Josephine Ezonbodor is a member of Agbere Council of Chiefs. She is also a member of several women associations and holds several leadership positions. Emmanuel Frank-Opigo – Honourable Commissioner for Works & Transport Engr. Frank-Opigo holds a Bachelor of Engineering (B.Eng) from the University of Nigeria, Nsukka (1984). He is a member of the Nigerian Society of Engineers (1989) and a registered member of the Council for the Regulation of Engineering in Nigeria (COREN). His extensive career includes: Site Engineer, General Endeavours Limited from 1984 to 1985, Projects Manager, Frank & Sons Limited (1985-1986), Resident Engineer, Project Engineering Associates (1986-1987), Senior Planning/Design Engineer (Civil), Front end Planning/Design Engineering, Shell Petroleum Development Company Limited (1987-1997), Senior Project Engineer, Ogoni & Bayelsa Projects, Community Projects Task Force, Shell Petroleum Development Co. Limited (1997-1998), Senior Engineer, Water and Sanitation Projects, Shell Petroleum Development Co. Limited (1998-2004), Basic Services Adviser, Infrastructure & Special Projects, Shell Petroleum Development Co. Limited (Jan 2005-May 2006), Director of Works and Services, Department of Works & Services, Niger Delta University, Bayelsa State (June 2006-June 2007). He was appointed the Honourable Commissioner for Works & Transport in July 2007. Maxwell Oko – Honourable Commissioner for Energy Mr. Oko holds a B. Tech in Architecture from Rivers State University of Science & Technology (2001) and is currently pursuing a M. Sc degree from the University of Jos. He started his career at Solid Works Nigeria Limited as Project Supervisor from 2003 to 2004. He subsequently proceeded to Peace Works Consult Limited as Youth Management Consultant from 2004 to 2006 and became the Managing Director of Eraskorp Nigeria Limited from 2005 to December 2006. He was the Special Assistant to the Honourable Minister for Energy between January to May, 2007 and Coordinator, Niger Delta Peace and Sustainable Development Unit – Group Public Affairs Division (GPAD) of the Nigerian National Petroleum Corporation (NNPC) in June 2007 before his appointment as Honourable Commissioner for Energy in July 2007. Kuroghoekegha Davidson Francis – Honourable Commissioner for Water Resources Mr. Kuroghoekegha obtained a National Diploma in Accountancy (OND) in 1990 from Rivers State Polytechnic, Bori. He started his career as a Clerical Officer, Governor’s Office, Nembe between 1980 and 1984, and subsequently moved to the Ministry of Education where he was Executive Officer (Account) Zonal Education Office, Nembe (1988-1990). He was appointed as Executive Secretary, Brass Local Government Education Authority, Nembe (1991-1996), Chairman, Caretaker Committee Nembe West Local Government Council (2001-2003), Chairman, Nembe Local Government Technical Committee on Delimitation of Electoral Constitutiences (2008). Victoria P. Denenu JP (Mrs) – Honourable Commissioner for Environment Mrs. Denenu graduated from the Lagos University Teaching Hospital, School of Nursing Lagos as Nigerian Registered Nurse in February 1971. She also attended Leicester Royal Infirmary, School of Midwifery, Leicester, England where she became a State Registered Nurse – England and Wales in November 1971 and State Certified Nurse Midwife, United Kingdom in March 1973. She proceeded to the Northeastern University, Boston Massachusetts, United States where she obtained Bachelors of Science (B. Sc) in Nursing in September 1978. She is a registered nurse of the State of New York (November 1979). Her work experience include: Staff Nurse Paediatrics Unit, Lagos Teaching Hospital, Lagos (1971-1972), Assistant Head Nurse, St John of God Hospital, Brighton, Massachusetts, USA (1973-1975), Staff Nurse – Coronary Care Unit, Good Samaritan Hospital, Suffern, New York, USA (1979-1981), Teaching – School of Nursing, Roackland Community College, Suffern, New York (1981), Teaching at School of Nursing, Port Harcourt, National Youth Service Corps (1982-1983), Senior Nursing Sister in charge of the Sick Bay (1983-1986), Matron in Charge of the Theatre, Rivers State University of Science and Technology (1986-1990) where she retired from the civil service.



Diekivie B. Ikiogha JP – Honourable Commissioner for Agriculture Chief Ikiogha (JP) graduated with a B. Sc (Hons) in Applied Chemistry from the University of Port Harcourt, Choba in 1987. He also obtained a Post Graduate Diploma (PGDP) in Petroleum Technology in 1991 from the University of Port Harcourt. He started his career as the Scientific Officer, Petroleum and Pollution Bureau, Rivers State from 1988-1989 and was at various times appointed as Personal Assistant to the Special Adviser to the Governor on Environmental and Pollution Matters, Rivers State (1992), Field Project Coordinator, Project on Effects of Gas Flares on Rivers State Environment (1991), Secretary, Rivers State Taskforce on Distribution of Petroleum Products (1993), Member, National Committee on Oloibiri Oil Museum (1995), Member, National Technical Committee on Compensation Rates for Damages due to the oil Pollution (1997), Acting Director/Head, Petroleum and Pollution Bureau, Bayelsa State (1998), Member/Secretary, Bayelsa State Community Relations Committee (CRC), Yenagoa (1998), Chairman, Taskforce on Procurement and Distribution of Petroleum Products, Bayelsa State (1998), Member, Federal Lands Allocation Committee, Bayelsa State (1999), Member, Bayelsa State Skills Acquisition Programme Implementation Committee (1999), Deputy Director, Bayelsa State Water Board (2004), Special Adviser to the Executive Governor on Oil & Gas Matters (2006-2007). He was appointed as Honourable Commissioner for Agriculture in July 2007. Dudafa Waripamo-Owei – Honourable Commissioner for Local Government & Rural Development Mr. Dudafa graduated with a Bachelor of Education degree in Accounting from the Rivers State College of Education (2000) and MBA Accountancy from Rivers State University of Science & Technology (2006). He served as the Protocol Officer, Government House, Bayelsa State from 2001 to 2002, Member, Bayelsa State House of Assembly from 2003 to 2007, Special Adviser to the Executive Governor of Bayelsa State on Youth Mobilisation and Empowerment from 2007 to 2008 and was appointed as Commissioner for Local Government & Rural Development in 2008. Kenigua Ibomo Robert – Honourable Commissioner for Commerce & Industry Mr. Kenigua graduated from the Rivers State College of Education Port Harcourt with the National Certificate in Education (N.C.E) in 1986 and proceeded to the University of Port Harcourt for his Bachelor of Arts (B.A) degree in French Education (1993). He commenced his career at the Bayelsa State Post Primary Schools Board and was appointed the Vice Principal of Grammar School, Ogu in 2005. He was appointed the Honourable Commissioner for Commerce & Industry in July 2007. Bethel Amabebe - Hon. Commissioner for Sports Development Mr. Amabebe was educated at Egba L.G.A. Community School, Abeokuta, Government Secondary School Amassoma, 1976-1981 and completed his Secondary School Certificate in Bishop Din Grammar School, Yenagoa, 1990. He proceeded to the University of Port Harcourt, where he obtained a B.Sc. degree in Economics in 2000 and a Post Graduate Diploma Management in 2006. Mr. Amabebe has an extensive working experience which includes: Pabod Breweries Limited, Port Harcourt (1983-1987); National Fertilizer Company, Port Harcourt (1987-2002). He was the State Chairman of All Nigeria People's Party (ANPP) (2002-2006). He served as Commissioner for Environment before his present appointment as Commissioner in the Ministry of Sports Development on 29th August, 2008. Etifa Bekeakpo– Honourable Commissioner for Youth, Conflict Resolution & Employment Generation Mr. Etifa obtained a Bachelor of Arts (BA.) degree in Philosophy from the University of Port Harcourt, Rivers State in 1995. He served with the Federal Character Commission in Abuja from 1999 to 2001, and was the Chief Executive Officer of Afagoz Nigeria Limited from 2003 to 2006. He was appointed the Special Adviser to the Governor of Bayelsa State on General Duties from Feb 2006 to May 2007 and Commissioner of Commerce & Industry for Bayelsa State from July 2007 to May 2008. He was subsequently redeployed to the Ministry for Youth, Conflict Resolution & Empowerment in June 2008.



Oru, Ebapregha Dora (Miss) – Honourable Commissioner for Gender and Social Development Hon. Ebapregha Dora Oru, a devout Christian, was born November 26th 1968 at Egbemor-Angalabiri in Ekeremor Local Government Area of Bayelsa State. She attended the Rivers State College of Education where she obtained National Certificate in Education (N.C.E) in 1995. She also holds a B.Sc. Degree in Adult Education and Community Development from the Rivers State University of Science and Technology, Port Harcourt in 2005. Her working experience includes Facilitator with the Niger Delta Environmental Surveys, Cashier with the Community Development Bank, Egbemor-Angalabiri, Administrative Officer with the Local Government Service Commission and Head of the Health Department in the Local Government Area. Her interest in grassroots politics started in 1999 when she became a Councilor representing her ward in Ekerernor Local Government Area. Hon. Ebapregha Oru rose to the position of Acting Local Government Chairman in 2002 when the then Government of Chief DSP Alamieyeseigha created 24 Development Centres. John D. Iyekoroghe - Honourable Commissioner for Special Duties (Central Senatorial District) Mr. Iyekoroghe was born 25th October 1960, in Apoi, Southern Ijaw Local Government Area. He was educated at State Primary School Apoi, Teachers Training College, Rumuokuta and the University of Port Harcourt where he obtained a Bachelor of Education degree in 1995. He was the Zonal Treasurer for the Nigerian Union of Teachers (1995-1997) and Political Secretary Apoi/Olodiama Local Government Area (L.G.A.) in 2001. He was appointed as a Special Adviser to the Executive Chairman, Southern Ijaw L.G.A. on petroleum, environment and pollution matters in 2002 and Chief Educational Officer Ministry of Education zonal office Oporoma in 2003. Prior to his appointment as a Commissioner in Bayelsa, he was appointed as the Supervisor for Lands and Housing Southern Ijaw L.G.A. in 2005. Bennet Owei–Zala - Honourable Commissioner for Special Duties (East Senatorial District) Chief Owei was born 16th November 1953 in Sangana, Brass Local Government Area of Bayelsa State. He was educated at Dennis Memorial Grammar School, Onitsha (1964-1966), Kings College Lagos (1967-1970), Ahmadu Bello University of Zaria (1972-1975) where he obtained a B.Sc. Degree in Biochemistry. He served as principal, Government Secondary School, Akassa (1976-1979); Board member, Delta Hotel Limited, Port Harcourt (1980-1983); Community Engagement Representative, Chevron (Nig) Limited Warri, (1998-2003); Adviser Policy, Government and Public Affairs (East) Chevron (Nig) Limited Port Harcourt. (2006-2007). Prior to his present appointment he served as Commissioner for Local Government and Rural Development (2007-May 2008). Stephen B. Ogullah – Honourable Commissioner for Special Duties (West Senatorial District) Mr. Ogullah obtained Diploma in Computer Science from Academy of Computer Education and Technology (Affiliated to IDPM London) Ibadan in 1992, Police Certificate from the Police Training School, Ikeja in 1995, Diploma, Business Administration from Delta State University, Abraka in 1999 and Higher Diploma, Business Management Technology from Federal University of Technology (FUTO) Owerri in 2004. He was employed at the University of Ibadan, Security Department from 1989 to 1994 and Nigerian Security Printing & Minting Company Limited from 1995 to 2002. He was appointed as a member of the Light Committee Sagbama Local Government Council from 2004 to 2005 and subsequently appointed as Executive Assistant to the Chairman Sagbama Local government Council from 2006 to 2007. He was appointed as the Honourable Commissioner for Special Duties (West) in July 2007.



Kesiye Frank-Oputu – Honourable Commissioner for Special Duties (Governor’s Office) Mr. Frank-Oputu holds a Higher National Diploma (H.N.D) from the Rivers State University of Science and Technology, Port Harcourt (1984) and Bachelor of Technology (B.Tech) in Estate Management from Rivers State University of Science and Technology, Port Harcourt (1989). He commenced his career as Project Supervisor, NUN Delta Company, Port Harcourt (1985-1987), Principal Estate/Valuation Officer, Unified Local Government Service, Rivers State (1987-1996), Principal Estate/Valuation Officer, Unified Local Government Service, Bayelsa State (1996-1999). He was appointed General Manager, Bayelsa State Housing & Property Development Authority in 1996 to 2003, Senior Legislative Aide, National Assembly Service Commission, Abuja (2004-June 2007) and Honourable Commissioner for Special Duties (Governor’s Office) in July 2007.


NIGERIA OVERVIEW The Information in this section has been extracted from documents and publications publicly available and released by various public and private organisations such as the CBN, the Economic Intelligence Unit (EIU), the World Bank, International Monetary Fund, Nigerian Bureau of Statistics, other financial magazines and journals. Neither the Issuer nor its advisers are able to ascertain if facts have been omitted that would render the reproduced information inaccurate or misleading.

Introduction

The Federal Republic of Nigeria is located in West Africa and shares land borders with the Republic of Benin in the west, Chad and Cameroon in the east, and Niger in the north. Its coast lies on the Gulf of Guinea, a part of the Atlantic Ocean, in the south. It consists of thirty-six States and the Federal Capital Territory. Nigeria operates a federal system of government comprised of three tiers, namely the federal government, state governments, and local governments. At both federal and state levels, there is separation of powers amongst the executive, legislative and judicial arms of government.

Nigeria, with a population of over 140 million, is the second largest economy in sub-Saharan Africa (“SSA”) accounting for 41% of the region’s Gross Domestic Product (“GDP”)1. Though, Nigeria’s economy is traditionally agrarian with agriculture contributing 42% to GDP in 20082, its export earnings have been dominated by crude oil which accounted for 95% of total exports and 90% of government revenues. This is a result of Nigeria’s position as a major oil producing country and favourable crude oil prices. Furthermore, although the agricultural sector is a major employer of labour, its relative contribution to the country’s revenue is low compared to the oil and gas sector. This is due to the fact that agriculture is largely practiced at a subsistence level in the country. As a result, Nigeria has not been able to earn substantially from export of agricultural produce.

Politics & the Economy

In 1999 Nigeria returned to democratic rule with the election of Chief Olusegun Obasanjo who served two terms of for (4) years each as the President of the Federal Republic of Nigeria. He was succeeded in April 2007 by Alhaji Umaru Yar’Adua thus making it the first successful transition from one civilian government to another in Nigeria’s 49 year history.

The administration promised to tackle the major problems affecting Nigeria as included in a 7 – point agenda, which include focus on the following sectors: • Power and Energy; • Food Security and Agriculture; • Wealth Creation and Employment; • Transport; • Land Reform; • Security; and • Education.

1World Bank country Brief on Nigeria (March 2009) 2 National Bureau of Statistics

NIGERIA OVERVIEW


The FGN renewed its emphasis on the rule of law and embarked on a rebranding exercise called “Good People Great Nation”, which is expected to lead to significant improvement in Nigeria’s perception by the rest of the world.

The conflict in the Niger Delta region escalated in May 2009 following an offensive attack by the FGN. The unrest in the Niger Delta region depressed oil production consequently, oil revenues which accounts for a significant proportion of Nigeria’s revenue. The conflict eased shortly after the offer of the amnesty by the President in June 2009 which was accompanied by the release of the leader of one of the key militia groups, the Movement for the Emancipation of the Niger Delta People (MEND). In October 2009, the amnesty offer was accepted by the militants which has since resulted in a more stable economic and political environment.

On May 6, 2010, Dr. Goodluck Ebele Jonathan who ran as the vice president alongside President Umaru Yar’Adua in April 2007 was sworn in as the President of the Federal republic of Nigeria following the sudden demise of the President Yar’Adua.

President Goodluck Jonathan has committed to the actualisation of his predecessors 7-point agenda with particular emphasis on power & energy, electoral reform, Niger Delta amnesty programme to ensure continued peace in the region, encourage improved production output and attract foreign investment.

External Debt

Nigeria’s external debt stock rose from $3,397.48 million in September 2007 to $3,720.36 million in December 2008, representing a 9.5% increase year on year according to the Debt Management Office (DMO). The nation’s total external debt stock as at September 2009 stood at $3,863.92 million which represents an increase of 3.86% over 2008 figure and 13.73% over 2007 external debt stock. Debt owed multilateral organizations (World Bank Group and the African Development Bank Group) accounted for 83.96% of total external debt stock in September 2007 and 85.28% of external debts in December 2008. Loans for Health and Social welfare, Agriculture and water supply projects accounted for the largest fractions in the external debt stock as at September 2009, taking 16.65%, 14.50% and 10.56% respectively. The steady increase in total external debts from 2007-2009 was due to increased spending on infrastructure development, increased budgetary allocations and drop in revenue accruable to the government as a result of the global economic crisis. The revenue decline was due to the steep dip in the price of crude oil-Nigeria’s main source of foreign exchange earnings to under $40 per barrel in mid 2008. Sub-national debt (State and local Governments external debt stock) also edged up 1.81% to $3,720.36 million in December 2008 from $3,654.21 million in December 2007. Following the Paris Club debt relief in 2006, Nigeria is among the countries with the lowest debt to GDP ratio in the world.

Domestic Debt

Nigeria’s domestic debt trend mirrored that of its external debt according to the DMO. The nation’s total domestic debts rose 6.94% to $2,320.31million in December 2008 from $2,169.63 million in December 2007. Domestic debt stock was $3,058.19 million in September 2009, representing an increase of 31.80% and 40.95% over 2008 and 2007 total domestic debt stock respectively. The Federal Government’s principal source of raising domestic capital between 2003 and 2006 was treasury bills. However, we have witnessed a shift to the issuance of Federal Government Bonds which now account for approximately 60.46% of the domestic debt stocks. The rise in the nation’s domestic debt stock was as a result of the need for the government to provide longterm funding for its planned infrastructure developments and budgetary allocations.

NIGERIA OVERVIEW


Monetary Policy

In line with the CBN Amendment Act, 2007, one of the principal functions of the Central Bank of Nigeria is to “ensure monetary policy and price stability”. In order to facilitate the attainment of the objective of price stability and to support the economic policy of the Federal Government, the Act provides for the constitution of a twelve (12) man Monetary Policy Committee (MPC) with the Governor of the CBN as the Chairman. The CBN recognizes that achieving stable prices would require continuous assessment and evaluation of its monetary policy implementation framework to enable it respond to the ever-changing economic and financial environment. Based on the foregoing, the CBN introduced a new monetary policy framework that took effect on 11th December, 2006 with the “Monetary Policy Rate” (MPR) as the Operating Target rate. The ultimate goal of this new framework is to achieve a stable value of the domestic currency through stability in short-term interest rates around which serves as an indicative rate for transaction in the inter-bank money market as well as other Deposit Money Banks' (DMBs) interest rate.

A key priority of the CBN is to reduce interest rate over time and sustain the lower rate such that it provides access to lower cost of funds for the development of the real sector. In line with this objective, the MPR was reduced in September 2008, to 9.75% from 10.25%. Further reductions in the MPR were witnessed in April and July 2009 to 8% and 6% respectively. Despite the spread which the CBN has imposed around lending rate, it has not achieved the desired result of keeping lending rates low as lending rates are still above the spreads stipulated by the CBN. (Source: Central Bank of Nigeria)

Fiscal Policy

In recent times, Nigeria’s approach to the formulation of fiscal policies with respect to its expenditure has been to benchmark its budget below the expected price of crude oil in the international market as the revenue from oil contributes about 95% of the country’s earnings. The 2010 budget is based on a benchmark of US$53 per barrel of crude oil despite the current price which averages US$75 per barrel. This oil-price-based fiscal rule has ensured that the economy stays focused on the improvement of budget execution and enhancement of public financial management.

The office of the President on November 24, 2009 issued a budget proposal to the Senate and House of Representatives which was characterized by supportive fiscal measures to accelerate economic recovery following the recent global recession and liquidity squeeze. This budget proposed an allocation of N1.37 trillion and N2.10 trillion for capital projects and recurrent expenditure respectively in 2010. These represented an increase of 72% and 48.9% from N796.74 billion and N1.41 trillion in 2009 respectively. However, the implementation of this budget following approval from the legislative arm will determine if the desired effect of stimulating the economy is achieved.

Agriculture In the first quarter of 2010, like other years, the major agricultural activities in the Northern part of the country are mainly harvesting of guinea corn and dry season crops while in the southern part of the country, preparation for the planting season starts. Expectedly, pre-planting activities dominate the farming activities during this period as the rainfall level is low across the country. With land preparation dominating the activities by farmers during this period, agricultural output is expected to be low, except for dry season crops. In terms of agricultural output, the real GDP growth in the first quarter of 2010 stood at 5.48% as against 5.46% in the corresponding period of 2009. The slight increase in growth recorded by the sector in the first quarter of 2010 could be attributed to the late harvest of crops in some parts of the country during the first two months of the year. However, activities in this sector was constrained by the recent drop in the prices of agricultural commodities following the global economic melt-down as reflected in the Consumer Price Indices, published by the National Bureau of Statistics, which indicated that the average year-on-year change in food inflation in the first quarter of 2010 was 13.8% as against 18.2% recorded in 2009. (Source: National Bureau of Statistics)

NIGERIA OVERVIEW


Gross Domestic Product

According to the National Bureau of Statistics, on an aggregate basis, the economy when measured by the Real Gross Domestic Product (GDP) grew by 7.23% in the first quarter of 2010 as against 4.50% in the corresponding quarter of the previous year as shown in the GDP Growth in % chart below. The 2.73% point increase in Real GDP growth observed in the first quarter of 2010 was accounted for by the increase in production in the oil sector of the economy. The nominal GDP for the first quarter of 2010 was estimated at ₦6,399,716.09 million as against the ₦5,404,850.00 million during the corresponding quarter of 2009, thus, indicating an increase of ₦994,866.09 million. The economy, which can be broken into two broad output groups, that is, Oil and Non-oil sectors, had the Oil sector witnessing increased output in the first quarter of 2010. The oil sector plays a pivotal role in the Nigerian economy as a dominant source of revenue to the government. (Source: National Bureau of Statistics)

Solid Minerals

Prior to the emergence of the petroleum industry, solid minerals exploration was one of the key sectors of Nigeria’s economy. Until the 1960s, coal and tin were mined in places like Enugu and Jos and exported on a large scale but poor management by state-owned enterprises led to a decline in existing operations. Nigeria is one of the countries with the highest concentration of varieties of solid minerals in Africa. The solid minerals sector is among the vital sectors that hold the key to the successful implementation of the Government’s efforts at diversifying the economy for sustainable development. It is expected that 34 solid minerals of abundant commercial quantities will soon be subject to bidding rounds for prospecting and exploration.

However, the contribution made by the sector to total GDP over the years has not been impressive compared to other sectors of the economy as solid minerals contributed 0.32% and 0.28% respectively in the 1st and 2nd quarter of 2009.

Oil & Gas Production

Since the beginning of 2009, crude price behaviour has alternated between periods of sharp upward movements followed by large corrections. The price of OPEC reference basket attained a high of US$72.92/b and a low of US$38.14/b in 9 months, 2009. Crude oil price movement in September 2009 shows some positive movement following the global outlook. The average price of the OPEC oil reference basket in September was US$67.17/b higher than the average year-to-date of US$57.15/b. The Nigerian National Petroleum Corporation (NNPC) stated on November 30, 2009 that the nation’s crude oil production capacity has recorded a quantum leap in the aftermath of the amnesty programme and the return of peace in the Niger Delta area. It is expected that the positive outlook of the world economy and its position on oil demand should help the oil price to sustain the current level or achieve a further increase. The combination of increase in the oil price and improvement in crude oil production is expected to improve the earning capacity of Nigeria and also bolster foreign exchange earnings.

The Oil & Gas Journal estimates that Nigeria had an estimated 185 trillion cubic feet (Tcf) of proven Natural Gas reserves as at January 2006, which makes Nigeria the seventh largest natural gas reserve holder in the world and the largest in Africa. The vast majority of natural gas found in Nigeria is

NIGERIA OVERVIEW


associated, meaning that it occurs in Crude Oil reserves as free gas. Because many of the fields lack the infrastructure to produce the associated natural gas, it is flared. Nigeria is one of the biggest gas flaring Nations in the world with 43 percent of its total annual natural gas production being flared. This prompted the Nigerian Senate to set a new deadline for oil companies to end gas flaring by December 13, 2010.

The Nigerian Government introduced the Gas Master Plan for the management of natural gas in 2008. The objective of the Gas Master Plan includes facilitating greater use of Liquefied Petroleum Gas (LPG), ensure the availability of gas to fuel the various power generating plants and promoting the West African gas pipeline project which entails the construction of a 600km pipeline to supply Nigerian associated gas to neighbouring Republic of Benin, Togo and Ghana. The gas master plan places emphasis on domestic market as opposed to exports and to ensure the success of the initiative, the Federal Government gave the oil companies a directive to make available to the domestic market at least 50 per cent of their total gas production.

Manufacturing

During the first quarter of 2010, manufacturing activities decreased relative to the same period in 2009. It recorded a decline in growth rate from 7.03% in 2009 to 6.43% in 2010. The development is traceable to the low manufacturing activities usually recorded in the first quarter after the festivities in the last quarter of the previous year, poor electric power supply, and inability to access credit from banks arising from the credit crisis in the banking sector. Cement production and other manufacturing activities were the major drivers of growth in this sector. (Source: National Bureau of Statistics)

There are positive signs that activities in the manufacturing sector will experience further improvement as the Federal Government of Nigeria is keen on improving power supply by achieving the 6,000 megawatt power generation target of December 2009 it failed to meet as President Goodluck Jonathan has assumed the leadership role in the Federal Ministry of Power.

Financial Institutions

The Financial Institution sub-sector comprises banking and insurance firms. The need for adequate liquidity in the sector to ensure that the banks meet up with their credit obligations to the other sectors for economic growth was constrained by the distortions that the banking sector experienced in 2008-09. This continued into the first quarter of 2010 especially the recent banking sector reforms initiated by the CBN to recover non-performing and bad loans from banks’ customers.

The reform by the Central Bank of Nigeria has increased banks’ risk averseness as the CBN has insisted on professionalism, reduction of operational abuses and waste in banking business. This has therefore drastically reduced the banks’ interest in lending activities as they are faced with task of recovering existing bad and non-performing loans. The sector recorded a growth of 4.07% in the first quarter of 2010 compared with the 4.21% recorded in same period of 2009. (Source: National Bureau of Statistics)

Telecommunications

This sector continued to perform impressively and has remained one of the major drivers of growth in the Nigerian economy. Following intensive marketing strategies and value added services by telecommunication companies in Nigeria, the sector recorded a real GDP growth of 1032.54% in the first quarter of 2010 compared with 31.75% recorded in the corresponding period of 2009.

According to the Nigerian Communications Commission (NCC), Nigeria, in the third quarter of 2009 overtook South Africa as the continent’s biggest mobile market with more than 62 million subscribers. The Nigerian telecoms market as a whole generated $8.4 billion in service revenue by the end of 2008, up

NIGERIA OVERVIEW


23% year-on-year as reported by industry research group Pyramid Research. As at April 2010, the NCC report stated that active subscribers for mobile CDMA, mobile GSM, and fixed wired/wireless were 78,854,603. It also mentioned that the industry at the same period had an installed capacity of 146,600,937. The telecommunications sector continues to attract substantial FDI as major telecommunications company over the world still seek to gain entrance into the Nigerian market.

Foreign Direct Investment (FDI)

Nigeria as a country, given her natural resource base and large market size, qualifies to be a major recipient of FDI in Africa and indeed is one of the top three leading African countries that consistently received FDI in the past decade. Foreign investors ploughed an unprecedented USD12.4 billion into the Nigerian economy in 2007 (World Investment Report 2008 – UNCTAD). This is a substantial sum at a time when more mature world economies were showing the first vital signs of a painful and protracted slowdown.

According to the latest 10-year forecast from Global Construction Perspectives and Oxford Economics, construction growth in Nigeria will be the fastest of all markets, by 2020. This is in view of its population of approximately 140 million which is urbanising at one of the fastest rates in the world. This is expected to attract considerable investment into construction, oil & gas and other sectors of the economy.

Credit Rating

Fitch Ratings on July 09, 2009 maintained its BB- sovereign rating on Nigeria which was attributed to the earlier reforms which had resulted in savings of oil windfall, accumulation of foreign assets and a very strong balance sheet. Meanwhile, the local currency rating was also maintained at BB- reflecting the development of domestic debt market since 2003.

Standard & Poor’s (S&P) lowered Nigeria’s ratings outlook to negative from stable, citing falling oil revenues, as a basis for the revision. It however affirmed Nigeria’s BB- foreign currency and BB local currency long-term sovereign credit ratings. However, some economic & financial analysts, including the CBN governor Mr. Lamido Sanusi faulted the S&P’s downgrade rating.


DESCRIPTION OF THE ISSUER

Overview of Bayelsa State Bayelsa State (“Bayelsa” or “the State”) with its capital city as Yenagoa is located in the southern part of Nigeria in the core of the Niger Delta region. Bayelsa State was created on October 1st, 1996 from Rivers State thus making it one of the newest states of the Nigerian Federation. The State currently has 8 Local Government Areas and three senatorial districts. Bayelsa is bordered on the east by Rivers State, on the west and south by the Atlantic Ocean and on the Northwest by Delta State. Based on the 2006 census, Bayelsa is one of the least populated states in Nigeria with a population of 1.8 million. Furthermore, about 92.3% of the population lives in the rural areas while 7.7% reside in the urban areas. Bayelsa State comprises mainly people of Ijaw ethnic nationality who are found also in Rivers, Delta, Ondo, Akwa-Ibom and Edo States. There are also Ogbia, Epie-Atisa, Isoko, Urhobo and Zarama-Engenni speaking communities in Bayelsa. Its predominant language is Ijaw; however, like the rest of Nigeria, English is the official language. Bayelsa State occupies an area of 9,059 square kilometres or just about 1% of the total land mass of Nigeria. Bayelsa State is located in the heart of the Niger Delta and lies within latitude 04’20’33” and 05’28’39” North, longitude 05’20’00” and 06’43’05” East in the equatorial rain forest. At 185km Bayelsa State has the longest coastline in Nigeria. Bayelsa State is one of the wealthiest states in Nigeria, but yet lacks the basic social infrastructure required for development. Bayelsa State’s Gross Domestic Product (“GDP”) was estimated at N2.17trillion3 as at December 2008 which makes the State the fourth largest state economy in Nigeria. Bayelsa produces about 514,800 barrels of crude per day out of the estimated 2.2 million barrels per day of total national production; this translates to 23.4% of the total oil production capacity of Nigeria. Oil & Gas Economic activity is however dominated by oil and gas activities, which accounts for 97% of the State’s revenue, making it one of the most oil-dependent states in the country. Major international oil companies, such as Shell Petroleum Development Company, Chevron Texaco Plc, Nigerian Agip Oil Company carry out exploration and production (“E&P”) activities in the State.

3 National Bureau of Statistics

Source: Economics Associates March 2009



The growth in the oil and gas industry over the past few years has been severely hampered by the activities of militants in the Niger Delta region, resulting in massive reduction in Nigeria’s (and Bayelsa’s) oil and gas production and consequent reduction in foreign exchange earnings and the State’s revenue. Recently, however, an offer of amnesty by the Federal Government was widely accepted by most militant groups accompanied with a surrender of arms and offer of support. The success of the amnesty program is expected to facilitate a revitalisation of the oil and gas industry. Agriculture The government of Chief Timipre Sylva has identified Agriculture which includes fishery, crop production and livestock as a key tool to developing Bayelsa. The industry employs in excess of 30%4of its State’s population and the major crops cultivated include mangoes, cassava, rice, vegetables, plantain, etc. In addition, the State’s geographical location and natural terrain consisting of rivers, creeks and an array of fresh water swamp offers enormous potential for its fishery industry. Consequently, investments have been made in the production and marketing of agriculture produce such as fisheries and sea food, rice, plantain, bananas and poultry. The State is also focused on the establishment of agro allied-industries to develop and process agro-based products which are by-products of certain food and cash crops such as sugar cane, coconut, oil palm, rubber and timber. Tourism Bayelsa has a wide variety of customs, traditions, festivals, music and art that supports its tourism potentials as a tourism destination of choice. As a result, Bayelsa, through the State Ministry of Information and Culture, and the Bayelsa State Council for Arts and Culture, has adopted strategies to properly harness and transform the State into a tourist destination of choice. There are currently a number of tourist attractions already existing in the State. There are two museums namely the Oloidi Museum and the Mangrove Museum which house a rich collection of artifacts dating back to one hundred years. At Twon–Brass in Brass Local Government Area (“Brass LGA”), there is the commonwealth graves of British soldiers who died in the Nembe- British war. Other tourist attractions include:

• The Agricultural Palm Beach which is located at Ekeremor in Ekeremor LGA. • The Ossiama Fish Lake which is located in Sagbama LGA; • The Okporoma Beach which is located in Brass LGA; and • The White Groove Yard which is located in Brass LGA.

Education Bayelsa State has a relatively high adult and youth literacy rate, compared to the national average of 65.7% and 80.2% respectively. The adult literacy rate is relatively higher in the rural areas (68.3%) than in the urban areas (64.5%). Consequently, youth literacy rate in the urban area of 84.4% is higher than the literacy rate in the rural area of 82%. The State has a net Secondary school enrolment rate of 49.5%, with male and female composition of 49.8% and 50.2% respectively5 . The secondary school enrolment was higher in the urban areas (59.8%) than in the rural areas (49.1%). The secondary school completion rate in the State is recorded at 17.3%.

4 International Public Finance, Fitch Rating 5 2006 CWIQ Bayelsa State Summary



Infrastructure One of the major constraints facing business operations in Nigeria and Bayelsa State in particular is the weak state of physical and social infrastructure. In recognition of this fact and the challenges it presents, the Bayelsa State Government has displayed commitment in improving the state of infrastructure through various initiatives and strategies. The key government initiatives for its improvement of infrastructure are highlighted below. • Rehabilitation and upgrading existing electricity distribution networks in the State • Construction of Senatorial road project will connect the 3 senatorial districts of the State, • Construction of Bayelsa Airport City due for completion in 2011, • Construction of Ekole Creek Bridge, • Construction of Rivers/Bayelsa railway line, • Construction of the re-designed Melford Okilo Memorial Hospital, • Construction of Cottage Hospital, Opolo, • Construction of Peace Park (Isaac Boro Park), • Construction of New Gate Way road (Glory Drive) into Bayelsa State. These projects will increase economic activity in the State, facilitate commercial activities and create jobs, improve accessibility and connectivity across the State, thereby facilitating the movement of goods and services within and across the border. Political Environment Bayelsa State has a vibrant political environment, with the national ruling party, the Peoples Democratic Party (PDP) also governing the State. The present administration led by His Excellency Chief Timipre Sylva, Executive Governor of Bayelsa State was inaugurated on May 29, 2007 for a four year term. The three arms of Government in the State are the Executive, Legislative and the Judiciary. The Executive Council is made up of the Governor, Deputy Governor, Commissioners, Senior Special Advisers, Special Advisers and the Secretary to the State Government. The Bayelsa State House of Assembly is the Legislative Arm of Government while the Judiciary is headed by the Chief Judge/Attorney General of the State. The eight (8) Local Government Councils in the State are run by their respective Executive Councils and legislative houses. Credit Rating Agusto & Co Limited, the pioneer rating agent in Nigeria, in May 2010, assigned a ‘BB-‘ and ‘A-’ rating to the Issuer and the Bond Issue respectively. The main rationale behind the positive rating is predicated on the significant improvement in oil production subsequent to the amnesty programme of the Federal Government for the Niger Delta militants. Also, notable increases in the international crude oil prices has led to a sizeable improvement in revenue accruable to the State as a major oil producer. This trend, if sustained could lead to a rating upgrade. Fitch Ratings on June 24, 2010 affirmed Bayelsa State’s Long-term foreign and local currency ratings at 'B', respectively, and affirmed its Long-term National rating at 'A-(nga)'. The affirmation of Bayelsa's ratings follows confirmation that key officials have resumed their duties and state matters in the Finance Ministry are now running as usual. This removes doubts about the reliability of budgetary information. Going forward, a higher predictability of state budgetary policies, amid a tight grip on spending, leading to better-than-anticipated budgetary outcomes could lead to a rating upgrade. Conversely, the state's ratings may be downgraded if debt or other liabilities grow above expectations amid slow progress in revenue diversification.

UTILISATION OF PROCEEDS


Bayelsa State has undertaken this Bond Issue primarily to reduce its interest costs, improve the overall cash flow of the State as well as extend the tenor of its facilities to enable it match its infrastructure needs with longer tenored funds. Accordingly, the State will utilize the sum of N46.484billion to part refinance its existing obligations. The estimated net issue proceeds of N46,484,550,000 after the deduction of issue costs of N3,517,465,000 representing 7.03% of the gross issue proceeds will be utilized for the repayment of existing obligation to lenders listed below. The total offer cost is made up of:

Description N % Underwriting Fees 1,500,000,000 3 Offer Cost 2,017,465,000 4.03

The outstanding obligations of the State are presented below:

Obligation 30/6/2009 Proposed Repayment

Lender (N'000) (N'000)

Equatorial Trust Bank 4,986,107 3,540,944.05

Bank PHB 3,977,465 2,824,644.76

Intercontinental Bank Plc 265,827 188,780.25

First Bank of Nigeria Plc 56,226,857 39,930,180.94

Multilateral debts 3,708,060 ‐

World Bank 2,243,221 ‐

Total 71,407,537 46,484,550.00



Brief Description of Projects Executed with the proceeds of the Loan Obligations In fulfillment of the medium to long term strategy of the State, the State has embarked on the following capital projects which were financed with the existing loans of the State. The projects are highlighted below:

S/N Project Total Project

Cost (N) Project Cost to

Date (N) Project Cost to Completion (N)

% of Completion

Proposed Completion

Date

1 Extension of Yenagoa Water Reticulation 567,076,000 482,014,600 85,061,400

85%

Dec. 2010

2

Construction of Gateway from East-West Link Road to Yenagoa 6,041,000,000 5,014,000,000 1,000,000,000

83%

*9 months

3 Construction of 500 Bed Space General Hospital, Yenagoa 5,620,000,000 2,300,000,000 3,320,000,000

41%

June 2011

4 31 Mw & 3 X 20 Mw Imiringi and Etelebou Gas turbines 14,501,668,537 12,670,156,014 1,831,512,523

87%

* 9 months

5 Construction of Yenagoa Galleria 5,472,989,917 2,227,161,010 3,245,828,907

41%

June 2011

6 Construction of 3 Senatorial Secondary Schools 6,012,011,803 1,382,762,714 4,629,249,089

23%

August 2010

7 Hotel Projects 13,839,475,000 3,600,000,000 10,239,475,000 26% June 2011 8 Central Business District 25,419,701,788 13,690,000,000 11,729,701,788 54% June 2012

9

Construction of Central Senatorial Road: Yenagoa-Oporoma 44,146,000,140 4,340,000,000 39,806,000,140

10%

* 52

months

10

Construction of West Senatorial Road: (Phase 1)

8,000,000,000 4,200,000,000 3,800,000,000

53%

*36 months

Total 129,619,923,185 49,933,094,338 79,686,828,847

* The number of months required to complete the project from the date of receipt of the required funding to completion from the State.

1. Water Reticulation Expansion Project The availability of water is a key driver of economic and social development and is fundamental to the existence of any community. Access to safe drinking-water will significantly reduce the transmission of water-borne diseases and improve the quality of life of millions of individuals.

The State identified water resources as a developmental priority in the medium term. Specifically, the State Government has identified the need to further improve the access to potable water sources in the State by expanding the existing water reticulation system in the Yenagoa metropolis. The Yenagoa Water Reticulation System (phase II) involves a network of underground pipes originating from the Yenagoa main water works at Okaka and running to individual homes within the city capital. Total length of the extension is expected to be approximately 55km. The water reticulation extension is expected to provide potable water to over 20 communities in Yenagoa. The Yenagoa Water Reticulation System project was initiated in 2006 to meet the pressing supply gap of affordable and quality water services for all Bayelsans. The project is being executed in phases. Prior to this



time a lot of the available water distribution network was a pipeline of about 35km comprising 100mm to 150mm diameter pipes (uPVC). The project is expected to achieve the following:

1. Distribute potable water to the households of all Bayelsa citizens 2. Link and connect all the water works in Yenagoa metropolis from Ovom to Igbogene

The entire reticulation system for the project is expected to cover 101km with phase one and two covering 46km and 55km respectively. The reticulation system (Phase II) is aimed at increasing the water distribution network and supplying potable water to 20 communities in the Yenagoa. The following communities are to be covered under the Yenagoa project communities include: S/N Location S/N Location S/N Location S/N Location 1 Yenezue‐gene 6 Akenfa 1 11 Yenegwe 14 Opolo 2 Biogobolo 7 Akenfa 2 12 Yenegoa 15 Okutukutu 3 Etegwe 8 Akenfa 3 13 Onopa 16 Edepie 4 Akenpai 9 Ovom 14 Ekeke 17 Agudama‐Epie 5 Igbogene 10 Amarata 15 Kpansia 18 Okaka

The length of the reticulation system was is about 46 km. Phase I is made up of a fully completed pipeline network of 46 km with a diameter of 400mm - 160mm diameter. The configuration of the network includes the following: • Primary Mains of 400mm, 315mm and 250mm diameter pipes laid along the expressway. • Secondary Mains of 200mm and 160mm diameter pipes laid along streets like Sanitation, Azikoro,

Okaka, Yenizue-Epie, Nikton, INEC, Otiotio and Ebis roads on both sides. • In addition about 150 public stand pipes and chambers were also delivered.

The State also plans to reticulate some of the newly constructed internal roads (27 roads with length of 56.64 kilometres). In addition to this, the Ministry of Water Resources also plans to expand capacity at its current water works facilities to increase the quantity of water generated from 6 million litres a day to 12 million litres per day. Preliminary estimate of this next phase is estimated at about N5 billion. Status of Work done of the Water Reticulation Project (Phase II) - This excludes the reticulation network along 11 additional new roads which are yet to be measured. About 48 km out of the 55 km pipeline network has been completed with the following configuration: • Primary Mains of 315mm and 250mm diameter pipes along the major highway. • Secondary Mains of 200mm and 160mm diameter pipes laid along Osiri, Erepa, Mr Biggs, Samphino POP,

Custom, Kimros, Barat, Akan, Opolo, and Green Villa.

2. East-West Gateway Road Project

The proposed 28km East-West Gateway road would be constructed in three phases. The construction of Phase 1 was awarded to Gitto Contruzioni Generali Nigeria Limited in May 2006 on a design and build basis. Messrs Toru-Ebi Konsult was appointed as consultant to supervise the works on full residency basis. The status or work done on the East-West Gateway road project is as follows; o Work on the Phase 1 of the road project is about 90% completed; o Tenders have been submitted by several construction companies for the Phases 2 & 3 respectively. o However, contracts have not yet been awarded for phases 2 & 3



3. Re-modelling and Re-Construction of the 500-Bed Hospital, Yenagoa The provision/availability of well equipped and fully functional hospitals is critical to achieving the State’s healthcare objectives. It has been generally established that Bayelsa’s healthcare facilities are too few and ill-equipped to cater for the many healthcare needs. The 500-bed hospital is expected to bridge the needed health infrastructure gap for its indigenes. Specifically, construction and remodelling of 500-Bed Hospital is to provide tertiary health by delivering specialised health care services such as general surgery, paediatric health care, critical care, accident and emergency and also provide referral services to the general hospital and primary health care centres in the state.

The remodelling and reconstruction of the 500-bed hospital has reached an estimated 45% overall completion. Additional construction work to be carried out on the project includes: • Construction of laundry and covered walkway • Refurbishing of auditorium • Construction of additional waiting area

4. 31Mw & X 20Mw Imiringi and Etelebou Gas turbines - Project Description

The Imiringi Gas Turbine project (“the Imiringi project”) is for the supply and installation of a Rolls Royce, Model RB211, 31MW gas turbine for the Kolo Creek Power Station. The contract was awarded in March 2006 to Robomichael Limited at a cost of about N3.5 billion. However, the contract value was later revised to about N6.3 billion. The technical consultant to the Imiringi Gas Turbine project is Micro Golem Nigeria Limited. The proposed Etelebou Gas Turbine project (“the Etelebou Project”) is for the supply and installation of 3x20MW gas turbines for Kolo Creek station. This is expected to generate a combined 60MW. The installation of the Etelebou gas turbines was awarded to Codel International Energy Limited in June 2005, at an initial cost of N7.7 billion. In addition to the above, there is also an associated project to the Imiringi and Etelebou projects (“the gas turbine projects”), the Switch Gear project. This project is critical to the functionality of the gas turbine projects and was awarded to Prosco Investment Limited in May 2008 at an original contract value of N0.33 billion. The contract was later revised as a result of technical variations to N0.6 billion. Key Socio-Economic Benefits The power sector is a critical infrastructure needed for the economic, industrial, technological and social development of any country. The Bayelsa State Government has set a target of increasing power generation from 3MW in 2009 to 750MW by 2011 as documented in the MTSS for the Ministry of Energy. The project is expected to deliver the following benefits to the State: • Standard of living - The standard of living measures the quality of life and it is generally accepted that

the consumption of energy at the household level is a key indicator of the level of standard of living. The various electrification projects are expected to bring stable power to the State capital, Yenagoa, and improve service delivery to the rural communities who have not had access to electricity in the past.

• Security - The security situation in the State is expected to improve through the lighting of public areas of the State. For example, the provision of electricity to the Niger Delta University is expected to create a safer learning environment for the students. Likewise, the completion of the ongoing street lighting program in Yenagoa should make the road safer for commuters and reduce incidence of accidents.



• Foreign Direct Investment - A key decision criterion in every investment is the cost of energy. Energy costs are usually high in economic environments in which power supply is unreliable. In order to attract foreign investment, it is critical for the State’s power supply sector to be re-vitalised. The achievement of the State’s medium term energy sector goal is expected to make the state a suitable destination for investors from within and outside the country. The State is also carrying out activities to make its efforts in the energy sector sustainable through the bush clearing of power lines and the training and development of people for the maintenance of the power plants and related infrastructure.

• Relatively Low Operating Costs for Commerce and Industry - Public provision of electricity has proven to be significantly cheaper to the end user when compared to private/individual provision through the use of electricity generating sets. Likewise, the lack of a public supply of electricity will prevent the establishment of heavy industries that could create large scale employment and significant economic growth.

• Health Sector - The provision of health care services is significantly affected by energy costs. Operating full service healthcare facilities involves a huge consumption of electricity for operating major equipment such as X-ray machines and scanners, running operating theatres, general wards, intensive care units etc. Due to the poor public provision of electricity, medical establishments incur huge energy costs that are passed on to the consumers, making healthcare unaffordable for the majority of the people. Public provision of electricity will significantly improve the affordability of healthcare services to residents of the State.

5. Construction of Yenagoa Galleria This Project is designed to be a 2-storey building with an additional mezzanine floor. The ground and first floor will consist of lifestyle shops and retail outlets while the second floor will have a 6 screen cinema. A block of four 3-bedroom apartments, measuring a gross floor area of approximately 2000 square metres (m2) will also be developed alongside, as part of the Project. The Project is located within the Ox-bow lake area of Yenagoa, which is being strategically positioned as an entertainment destination. The Yenagoa Galleria is expected to enjoy good occupancy and visitation based on the fact that there is no cinema in Yenagoa and it is situated in close proximity to the proposed Central Business District (“CBD”). It is envisaged that with numerous infrastructure development projects taking place around the Ox-bow area as well as the wider Yenagoa, the traffic of visitors to the area will expand in future. Project Objectives and Socio-Economic Benefits It is envisaged that the development of the Yenagoa Galleria will provide the following social and economic benefits: • Raise the profile of Yenagoa as a destination city for meetings and events - The ultra modern Galleria

will increase the influx of people for leisure purposes to Yenagoa, thus raising the economic and social profile of the city.

• Employment opportunity - Employment opportunities will be created directly by the Galleria, and it is also anticipated that the Project will trigger off the growth of other leisure facilities and activities, thereby indirectly creating additional employment.

• Revenue generation for the State - It will provide a source of internally generated revenue for the State in form of income from business operations, levies, and taxes. Also the Project will encourage the exploitation of the film industry in its potential for creating employment and in its value as a commercial and cultural commodity, and attract highly skilled workers to the state.



6. Construction of 3 Senatorial Secondary Schools

The Senatorial Schools Project (“the Project”) is driven by the State Government’s bid to provide qualitative educational opportunities for all residents on an equitable basis, regardless of location and ethnicity. The vision of the State Ministry of Education (“MoE”) is to use education as a tool for the socio-economic and political empowerment of every citizen of Bayelsa, irrespective of gender, age, geographical location and tribe. The proposed international model secondary schools are to be located in Ovom (Yenagoa), Basambiri (Nembe) and Sagbama. The implementation of this project will be in compliance with three of the four priority areas in 2009. These areas include access and equity, standards and quality assurance, funding, resource mobilization and utilization, for post-basic education. The schools are expected to accommodate 2,500 students each, providing boarding facilities and equipped with science laboratories, workshops and an ICT building. Project Objectives and Benefits The implementation of the international model secondary schools in these communities will provide the following benefits: • Access and Equity - When compared with Organisation for Economic Co-operation and Development

(OECD) countries (average class size in public institutions of 23.8 students per classroom) and other countries such as Brazil, Chile and Israel with average classroom sizes of 33.4, 31.5 and 31.5 respectively, it is apparent that Bayelsa State has an insufficient amount of classrooms with an average classroom size in public institutions of about 60 students. The international model secondary schools propose to add 146 classrooms to the total available classrooms in the State. Create opportunities for improved teacher morale via provision of needed teacher infrastructure such as staff quarters.

• Technical and Vocational Skills - Contribute significantly to the development of technical skills in the students and inculcate a fundamental appreciation of applied science and engineering technology, which represents the backbone of the real sector of the economy. In addition, it Increases the availability and appreciation of technical skills and competencies in the host communities which will contribute to preparing indigenes for emerging economic opportunities in Bayelsa.

• Contribution to the attainment of Millennium Development Goals - With a female literacy level of 51% in the State, the three senatorial schools are expected to contribute significantly to providing the needed infrastructure to achieve the millennium development goal of eliminating gender disparity in primary and secondary education by no later than 2015.

7. Tower Hotel and Conference Centre The Tower Hotel and Conference Centre (“THCC” or “the Hotel”) was conceived to be a top class hotel in Yenagoa as well as a major destination for conferences in the city. The THCC is located on a 80,601m2 land by the junction between Isaac Boro Road and Sani Abacha Road, opposite NNPC filling station, in the centre of Yenagoa city. The Hotel is designed to have 150 rooms on 17 floors. The THCC project is expected to provide the following benefits to its immediate community and the entire State, amongst others:

o Raise the profile of Yenagoa as a destination city for meetings and events; o Provide employment opportunities for its citizens;



o Income to the BYSG in form of operating profit, infrastructure maintenance levies and other contributions;

o Further development of the local community The contract for the construction of the Hotel was awarded to Gito Costruzioni Generali Nigeria Limited (“Gito”) in 2005 and the works commenced in April 2006 for an initial construction of period of 18 months up till October 2007. However, due to contractual and operational issues, the contract was further extended by another 18 months. Based on the most recent architects’ certificate of work, the THCC is at a 44% degree of completion. The hotel construction has reached the 16th floor. On the other hand, the small conference centre has reached roof beam level while the large conference centre has only reached a foundation level.

8. Yenagoa Central Business District

The Yenagoa Central Business District involves the establishment of a Central Business District (“CBD” or “the Project”) in the capital city of Bayelsa, Yenagoa. Baesd on the project plan, the CBD shall contain the various components which shall be categorised into the following: • Hotels and Conferencing • Residential Apartments • Office Building/Blocks • Retail Outlets and Shopping Malls • Leisure and Cultural Centres The Project would be delivered by means of a PPP arrangement. YCDC has been set up as Special Purpose Vehicle (SPV) to oversee the development and operation of the CBD. In this regard, First Bank of Nigeria and other potential co-equity and investors will invest directly.

9. Yenagoa-Oporoma Road Project The proposed Yenagoa - Oporoma road project was awarded to Julius Berger Nigeria Plc in 2008, and will cover a length of approximately 38km. The road will consist of about 7 major bridges and span over River Nun to Oporoma axis. The road will consist of lined side drains that will allow for wrought shuttering to exposed surfaces, and rough shuttering to unexposed surfaces. The lined side drains shall be provided for by first excavating any material except rock for the lined drains, and then providing compact concrete Grade 20 to walls of the drains to make provisions for weep holes. 150 x 300mm precast kerbs in Grade 20 concrete will be laid along side of road on top of embankment, to make provisions for excavation and bedding. Based on the outcome of the Medium Term Expenditure Framework (“MTEF”) strategy sessions of the Bayelsa Ministry of Works and Transport, the broad goals of the State with respect to the transportation sector for the period 2009-2011 are as follows:

o Facilitate development through the provision of infrastructure within Bayelsa State; o Reduce cost of living through provision of affordable means of transportation to all parts of Bayelsa

State; o Control and minimize the effects of natural phenomena such as flood and erosion in Bayelsa State

Specifically, the Yenagoa-Oporoma road project is targeted at partly achieving the first two goals stated above by providing a good network of roads within the State capital. In particular, the Yenagoa-Oporoma



road is expected to enhance the accessibility of the Yenagoa-Oporoma areas, which are currently inaccessible by road. The strategic importance is to provide wider access to markets for the rural population. Key Socio-Economic Benefits Transport infrastructure (particularly, road) plays an integral part in both urban and rural development. Transport infrastructure enables local communities access the opportunities and necessities that will significantly boost their livelihood, and engender economic activities in developing environments. The economic importance of roads and road transport related sectors cannot be overemphasized as road infrastructure influences both economic growth and social cohesion. Therefore, a good road network plays a vital role in improving the local economy as well as creating a higher degree of social well-being within individual families, communities as well as companies and industries operating in Bayelsa State. The socio-economic benefits derivable from good road networks include:

o Increased Economic Activities o Reduced Commuting Time o Education and Training o Healthcare

The status of work done on the Yenagoa-Oporoma Road Project to date is as follows: o Preliminary site clearing commenced immediately after the road project was awarded to Julius Berger

at a cost of N38 billion; o Site clearing has been carried out to about 90% and sand is going toward Igeibiri from Angiama,

which is about 17km; o Overall, the road project is about 10% from completion; o Total expenditure on the project amounts to about N4.3 billion; and

10. Construction of West Senatorial Road Project Yenagoa – Agge (Phase II) The proposed Yenagoa-Agge road will be developed in 2 phases as follows:

• Phase I: Ogobiri-Toruebeni Road; and • Phase II: Toruebeni-Agge road.

Phase I of the road project which covers about 6.1km will commence at Ogobiri and slope eastwards towards Toruebeni. While phase II of the project, which covers about 82.9km, will commence at Toruebeni and move northward towards Aleibiri, parallel to the Bomadi Creek. It will terminate at 40km on the outskirts of Ekeremor town. The entire road project is the first phase of the Bayelsa West Senatorial road, and will be designed as a two-lane carriageway covering a total length of approximately 89km. The road will consist of about 6 bridges with a cumulative length of about 180 metres and will have the following finishing:

• 40mn Asphaltic wearing course; • 50mn, Asphaltic binder course; • 150mn, minimum stabilised sand/ soil well compacted sub-base; and • 150mn, minimum granite chippings crushed rock base by the wet process

The proposed Yenagoa-Agge road project is expected to provide the similar social and economic benefits as the Yenagoa-Oporoma Road Project.



Future Projects The State is also planning to embark on the following projects which are strategic to the economic development of the State:

S/N Project Total Project Cost

(N) 1 Epie Creek Aquaculture Fish Farm 429,000,000 2 Peremabiri Isampou Rice Project 2,030,000,000 3 Construction of East Senatorial Road: Nembe-Brass 42,038,840,848

Total 44,497,840,848 1. Epie Creek Aquaculture Project

The Epie Creek Upland Aquaculture project involves the establishment of an industrial fish farm facility on 172 hectares of land along the upland region of the Epie Creek in Bayelsa State’s capital city, Yenagoa. Based on the project plan, the Epie Creek Aquaculture Project shall possess cages (120), earthen ponds and concrete tanks for fish production, as well as hatchery, processing and training facilities.

The project will focus on the rearing of catfish and tilapia species, which would be processed and eventually sold at a margin, at prevailing market rates. Partnership arrangements between the State and ONIDA Enterprises Limited, a private sector company also involved in fish rearing in Vietnam, are being negotiated, though binding arrangements have not been finalised. The project also has the following objectives: • To turn Bayelsa State into a global fish destination; • To ensure the modernisation and expansion of fisheries industry in line with global best practices; • Empowerment of Bayelsa State citizenry through creation of employment opportunities in the fisheries

sector; and • Exploitation of untapped potentials of our aquatic resources In addition to the Epie Creek Aquaculture Project, the Bayelsa State Government is promoting a number of other initiatives with private sector participation. Some of these projects include:

• Borrow Pits Project: consisting 44 borrow pits spread across the capital city and owned by the State/ Communities, in partnership with the private sector.

• Trawler Fishing Project: the State has acquired two vessels, for exploration of aquatic resources in the deep seas. Full exploration is expected to start in 2010.

• Marine Shrimp Farming: involving the culture of marine shrimp in a semi-natural environment, in two cycles annually, for harvesting and sale to the general public.

2. Peremabiri Isampou Rice Project

The Bayelsa State Rice Project is to be located on a total of 10,000 hectares of land in Peremabiri, Isampou and Kolo areas of the State. Currently, the State has inaugurated a Special Purpose Vehicle, the Bayelsa Farms Limited (BFL) to execute this project, as well as its Greenhouse Vegetable project. The terrain of the proposed project sites for the Rice Project represent excellent sites for rice production and would contribute to enhancing the project’s feasibility. The project will focus on the planting, harvesting and processing of rice crops. The processed and bagged rice would subsequently be sold for profit at prevailing market rates.



3. Construction of East Senatorial road projects: Nembe - Brass

The State Government is currently implementing plans to construct senatorial roads linking the State capital, Yenagoa to each of the three (3) senatorial zones of the State. The eastern senatorial road is the first of such initiatives. The 43km road starts from Yenagoa, and passes through Ogbia and Nembe before terminating in Brass local government. The Nembe-Brass road is the third and final phase of the Bayelsa East Senatorial road. The road is designed as a two lane road with width of 12.3 metres and an approximate drive surface of 7.3 metres51. The road will consist of about 16 bridges with a cumulative length of about 1.5 kilometres52. The project construction period is expected to be forty-eight (48) months. The construction of the Nembe-Brass road will commence at the Kalatoru Creek and stretch towards Kiberi Creek. The road meanders in the direction of the St. Nicholas River. From St. Nicholas River, the road will continue in the following order:

o Okpoama Creek to Diemo Creek; o Diena Creek to Okpoama settlement; o Okpoama settlement to Ewoama settlement o Ewoama settlement to Brass settlements; and o Terminates at the Brass River.

The various project activities for the development of the road include the following:

o Deforestation and land filling; o Aquatic destruction; o Technical evaluation and project management; o Construction, installation, and re-positioning of high pressure oil pipeline; o Dredging, piling and structural work for manifold construction and installations; o Project planning with particular emphasis on health, safety and environment performance,

sustainable community relation policies; and o All aspects of civil, foundation, reservoir, engineering and construction.

Project Objectives The objectives of the transport sector as stated in the 2009-2011 MTSS of the Bayelsa State Ministry of Works and Transport, are as follows:

o Facilitate development through the provision of infrastructure within Bayelsa State; o Reduce cost of living through provision of affordable means of transportation to all parts of Bayelsa

State; and o Control and minimize the effects of natural phenomena such as flood and erosion in Bayelsa State

Specifically, the Nembe-Brass road project is targeted at partly achieving the first two goals stated above by meeting the following objectives:

o To provide effective and efficient land transportation system for the State; and o To provide necessary road networks to link the three (3) senatorial zones to the State capital.

In particular, the Nembe Brass road is expected to enhance the accessibility of the Nembe and Brass areas which are currently inaccessible by road. This is particularly vital given the strategic importance of the Brass LNG project expected to take off in 2011.



Key Socio-Economic Benefits Increased Economic Activities Reduced Commuting Time Education and Training Healthcare

Project Status The current status of the proposed Nembe Brass road project is as follows:

o Engineering consultants employed by the Ministry of Works & Transport have concluded road designs and initial project costing.

o The Environment Impact Assessment (“EIA”) study of the Project, which was estimated at about N75 million was awarded to Atlantic Fredim Investment Company Limited. The report has since been submitted.

o A construction contractor, Moreno Plc, has been engaged to build the proposed road at a cost of N42 billion.


EXTRACT FROM THE ISSUER’S RATING REPORT


EXTRACT FROM THE BOND ISSUE RATING REPORT



The Executive CouncilBayelsa State Government of NigeriaYenagoaBayelsa State

and

The Directors The DirectorsFBN Capital Limited and UBA Capital (Africa) Limited16, Keffi Street 57, MarinaSouth West Ikoyi LagosLagos

Gentlemen

Yours faithfully

Bosede A OdeloyeFor : Akintola Williams Deloitte

21 June 2010

We have reviewed the accounting basis and assumptions for the revenue and expenditure projections of Bayelsa State of Nigeria ("the State")for the year ended 31 December 2009 and the eight years ending 31 December 2017, for which the Executive Council of Bayelsa StateGovernment of Nigeria ("BYSG") is solely responsible.

We wish to emphasize that no business is free of major risks and few financial projections are free of errors of commissions or omissions.Consequently, these financial projections relate to the future and may be affected by unforeseen events as there may be differences betweenforecast, estimated, budgeted or projected results and the actual results because events and circumstances frequently do not occur asexpected, and those differences may be material.

Subject to this, in our opinion, the revenue and expenditure projections so far as the accounting basis and assumptions are concerned, havebeen properly compiled based on the assumptions made by the State Executive Council and are presented on a basis consistent with theaccounting policies normally adopted by the State.

FINANCIAL FORECASTS

Letter from the Reporting Accountants

FINANCIAL FORECASTS


Memorandum on financial projections

Recurrent Capital Recurrent Capital NetYear revenue revenue expenditure expenditure Surplus

N'million N'million N'million N'million N'million2009 87,946 3,965 (64,248) (20,713) 6,950 2010 84,007 5,417 (69,938) (9,297) 10,189 2011 109,966 5,579 (67,375) (19,437) 28,733 2012 140,815 5,964 (70,333) (42,662) 33,783 2013 138,644 6,809 (74,901) (45,577) 24,975 2014 152,707 7,774 (78,232) (53,464) 28,784 2015 169,201 8,875 (83,364) (69,443) 25,268 2016 190,667 10,131 (87,192) (89,703) 23,903 2017 210,699 11,566 (86,163) (113,118) 22,985

Honourable Commissioner for Finance Accountant GeneralBayelsa State Government of Nigeria Bayelsa State Government of Nigeria

YENAGOA, NIGERIA

Dated this 21st day of June 2010.

The Executive Council of Bayelsa State Government of Nigeria is of the opinion that subject to unforeseen circumstances, the State's revenuesand expenditures for the year ended 31 December 2009 and each of the eight years ending 31 December 2017 will be approximately asfollows:

The Executive Council of Bayelsa State hereby approved the Memorandum on the financial projections for the year ended 31 December 2009and each of the eight years ending 31 December 2017, a copy of which has been initialed by the Honourable Commissioner for Finance of theState for identification purpose.

Memorandum on the financial projections

FINANCIAL FORECASTS


1 . BAYELSA STATE BOND

1.1 History of Bayelsa State

1.2 The Offer

(a) Summary of terms of the Bond

Face value: N50 billionCoupon:

Price: N1,000 per unitTenor: 7 yearsSecurity:

Redemption plan:

(b) Utilisation of proceeds

N'million %Repayment of existing obligations 46,485 93.0Estimated Cost of Issue 3,515 7.03%

50,000 100.0

(c) Tax status

The Bond principal shall be redeemed at par at maturity while the coupon shall be repaid in fourteen(14) equal semi-annual instalments of N7.75 billion each on 30 June and 31 December beginningfrom 31 December 2010.

A summary of the key terms applicable to the Bond are as follows:

Bayelsa State was created by the Military Government on 1 October 1996 out of the old Rivers State. The State is bounded on the Westby Rivers State, on the East and South by the Atlantic Ocean and on the North by Delta State. It has a land mass of 10,773 km², apopulation of about 1.7 million as at 2006 and is divided into eight (8) Local Government Areas (LGAs). Bayelsa State has one of thelargest crude oil and natural gas deposits in Nigeria, resulting in extensive petroleum production in the State.

The Bayelsa State Bonds, Notes and other Securities Issuance Bill 2009 empowers the Bayelsa State Government of Nigeria to raise a sumof N50 billion directly from the capital market by the issuance of a Bond. The Bond is for the purpose of refinancing of existing loanobligations and financing of various developmental projects as the Executive Council may approve.

Secured by an Irrevocable Standing Payment Order (ISPO) issued by the BYSG and approved by theFederal Ministry of Finance on 5 May 2010, as a first charge upon and payable out of statutoryallocation with effect from May 2010.

This may vary in line with the prevailing market rate. However, a rate of 15.5% per annum has beenused for the purpose of this financial projections.

The estimated issue proceeds of N50 billion will be applied as follows:

In order to demonstate its commitment to the development of the Nigerian economy and encourage the various sectors to contribute tothe Nation's growth and development, the President of the Federal Republic of Nigeria recently granted a waiver of taxes on allcategories of bonds, based on the recommendation of the Bond Market Steering Committee. The Bond therefore is exempted from taxunder the Personal Income Tax Act, Capital Gains Tax Act and Value Added Tax Act.

History and Terms of the Offer

FINANCIAL FORECASTS


The following significant accounting policies will be adopted by Bayelsa State of Nigeria during the projected period:

(i) Basis of accounting

(ii) Investments

(iii) Revenue

The revenue of the State consists of the following:* Statutory allocation* Internally generated revenue (IGR)* Capital receipts.

(iv) Expenditure

The State's expenditure comprises:* Recurrent expenditure* Capital expenditure.

(v) Capital costs

These are recognised in the year of occurrence only.

(vi) Assets and liabilities

Assets and liabilities are stated at their net book value.

(vii) Foreign currencies

The financial statements were prepared under the historical cost convention using the cash basis of accounting.

Investment in shares are held under the Ministry of Finance Incorporated (MOFI) and are stated at cost while bonus issues are shown butnot considered in value recognition. All investment income received are credited to Consolidated Revenue Fund account.

Transactions in foreign currencies are converted to Naira at the rates of exchange ruling at the dates of the transaction. Foreigncurrency balances are converted to Naira at the rates of exchange ruling at the statement of assets and liabilities date. Gains or lossesarising on translation when realised, are credited or debited to the Consolidated Revenue Fund.

2. Statement of Accounting Policies

FINANCIAL FORECASTS


3 . FINANCIAL PROJECTIONS FOR THE EIGHT YEARS ENDING 31 DECEMBER 2017

3.1 Revenue and expenditure projections

2009 2010 2011 2012 2013 2014 2015 2016 2017N'million N'million N'million N'million N'million N'million N'million N'million N'million

Revenues:Recurrent revenue 87,946 84,007 109,966 140,815 138,644 152,707 169,201 190,667 210,699 Capital revenue 3,965 5,417 5,579 5,964 6,809 7,774 8,875 10,131 11,566

91,911 89,424 115,545 146,779 145,453 160,480 178,075 200,798 222,266

Expenditures:Recurrent expenditure 64,248 69,938 67,375 70,333 74,901 78,232 83,364 87,192 86,163 Capital expenditure 20,713 9,297 19,437 42,662 45,577 53,464 69,443 89,703 113,118

84,961 79,235 86,812 112,996 120,478 131,696 152,807 176,895 199,281

Surplus of revenue over expenditure 6,950 10,189 28,733 33,783 24,975 28,784 25,268 23,903 22,985 Bond proceeds - 46,000 - - - - - - - Proceeds from internal loans 63,048 - - - - - - - - Net revenue 69,998 56,189 28,733 33,783 24,975 28,784 25,268 23,903 22,985

Appropriations:

Repayment of internal loans (80,495) (46,924) (9,381) (6,205) (3,323) (1,534) - - - Repayment of external loans (157) (157) (157) (157) (157) (157) (157) (157) (157) Transfer to Sinking fund for Bond repayments - (8,687) (14,893) (14,893) (14,893) (14,893) (14,893) (14,893) (6,205) Transfer to Security Fund - (3,345) (4,335) (5,372) (6,376) (6,498) (6,337) (7,199) (7,969)

(Deficit)/surplus for the year (10,655) (2,924) (33) 7,156 226 5,703 3,881 1,654 8,653

3.2 Basis(i)

(ii) The actual results per the audited financial statements for the six months ended 30 June 2009 and the estimates for the remaining six months of theyear ended 31 December 2009; and the years ending 31 December 2010, 2011, 2012, 2013, 2014, 2015, 2016 and 2017 have been prepared on a basisconsistent with Government Accounting Policies and Financial Regulations.

The State Executive Council are of the opinion that subject to unforeseen circumstances, and based on the assumptions in note 3.3, the State's recurrentrevenue, recurrent expenditure, capital receipts, capital expenditures and appropriations for the year ended 31 December 2009 and each of the eightyears ending 31 December 2017 will be approximately as detailed below:

The financial projections include results as shown by the audited financial statements of the State for the six months ended 30 June 2009.

FINANCIAL FORECASTS


3.3 Assumptions

(i)

(ii)

(iii)

(iv)

(v)

(vi)

(vii)

(viii)

(ix)

(xi)

(xii)

(xiii)

(xiv)

(xv) Inflation rate in Nigeria will be at an annual average of 8.2% during the projected period.

(xvi) The economic and political climate of Nigeria will remain stable.

(xvii) No act of God that may adversely affect the projections is envisaged.

Recurrent expenditure will range between 45% and 76% of recurring revenue during the projected period.

Internally generated revenue is expected to increase by 23% per annum from 2010 to 2017.

Nigeria's current crude oil production level would remain stable while crude oil price will not fall below US$52.0 per barrel during theforecast period.

The 50,000,000 units of N1,000 each on offer at par will be fully subscribed and the proceeds of the Offer will be received during thesecond half of 2010.

The following assumptions have been made and are expected to remain in operation throughout the projected period:

The population of Bayelsa State in relation to that of Nigeria will range between 1.18% and 1.21% during the forecast period.

The Federation Account, Excess Crude Oil and Value Added Tax revenue sharing formula would not alter significantly from those used inpreparing the projections.

There will be no significant changes in Federal and State Governments' monetary and fiscal policies during the forecast period that willadversely affect Bayelsa State.

Revenue from Value Added Tax (VAT) will increase by 37% in 2010, 3% in 2011, 7% in 2012 and by 14% annually from 2013 to 2017.

5% of the State's Federal Allocation Revenue (comprising of statutory allocation, VAT and mineral oil derivation) shall be transferred to aState Reserve Fund annually for savings purposes.

The interests on the Bond shall accrue semi-annually to a Sinking Fund account while payment of principal and interest shall be madefrom the Sinking Fund Account to be managed by the Trustees.

The Bond principal shall be redeemed at par at maturity while the coupon shall be repaid in fourteen (14) equal semi-annual instalmentsof N7.75 billion each on 30 June and 31 December beginning from 31 December 2010.

Excess crude revenue has been estimated based on the difference between forecast benchmark and forecast actual price of oil during theforecast period while the revenue accruing annually is shared according to the same revenue sharing formula for statutory allocation.

Capital expenditure will be based on availability of funds during the forecast period. However, a cumulative average growth rate of 23.6%is projected during the forecast period.

Bases and Assumptions


4 .PR

OJEC

TED

STAT

EMEN

T OF A

SSET

S AND

LIAB

ILITIE

S

Audit

ed

31-D

ec20

0820

0920

1020

1120

1220

1320

1420

1520

1620

17N '0

00N'0

00N'0

00N'0

00N'0

00N'0

00N'0

00N'0

00N'0

00N'0

00AS

SETS

:

Cash

& ba

nk ba

lance

s12

,511,7

211,8

57,16

6

1,181

,236

2,8

63,88

3

6,1

80,24

2

6,4

05,84

5

12

,108,4

77

15

,989,4

81

17

,643,7

86

26

,421,2

30

Inves

tmen

ts12

,041,9

8312

,041,9

83

13

,114,4

89

15

,881,7

98

25

,093,7

95

31

,469,5

37

37

,967,3

94

44

,304,5

51

51

,503,5

13

59

,472,3

23

Adva

nces

248,3

56

248,3

56

148,3

56

-

-

-

-

-

-

-

24,80

2,060

14,14

7,505

14,44

4,081

18,74

5,681

31,27

4,038

37,87

5,382

50,07

5,871

60,29

4,032

69,14

7,299

85,89

3,553

REPR

ESEN

TED

BY:

Cons

olida

ted Re

venu

e Fun

d(1,

169,8

69)

170,1

77

363,0

91

(202,5

55)

65

1,634

64

5,291

1,0

38,91

6

98

8,582

2,2

14,07

2

12

,542,8

83

Capit

al De

velop

ment

Fund

25,97

1,929

13,97

7,328

10,73

5,978

11,26

8,606

17,57

0,592

17,80

2,537

23,11

1,544

27,04

2,882

27,47

1,697

25,92

0,330

State

Secu

rity F

und

-

-

3,345

,012

7,6

79,63

0

13

,051,8

12

19

,427,5

54

25

,925,4

11

32

,262,5

68

39

,461,5

30

47

,430,3

40

24,80

2,060

14,14

7,505

14,44

4,081

18,74

5,681

31,27

4,038

37,87

5,382

50,07

5,871

60,29

4,032

69,14

7,299

85,89

3,553

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FINANCIAL FORECASTS


5 .

PROJ

ECTE

D CO

NSOL

IDAT

ED R

EVEN

UE F

UND

(CRF

)

Actu

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ted

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mon

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0920

0920

1020

1120

1220

1320

1420

1520

1620

17No

teN '

000

N'00

0N'

000

N'00

0N'

000

N'00

0N'

000

N'00

0N'

000

N'00

0N'

000

Recu

rrent

rece

ipts

:In

tern

ally g

ener

ated

reve

nue

1,23

9,74

9

2,29

0,80

5

3,53

0,55

4

4,21

1,96

7

5,18

0,30

6

6,37

1,26

7

7,83

6,03

3

9,63

7,55

1

11,8

53,2

41

14

,578

,322

17

,929

,904

St

atut

ory a

lloca

tion

7,39

3,39

1

6,11

1,76

2

13,5

05,1

53

12,6

34,6

32

13

,498

,554

15,9

66,6

61

21

,902

,002

25

,078

,052

25

,266

,079

28,7

22,0

08

32,0

03,0

74

13%

Mine

ral r

esou

rces

reve

nue

19,8

59,5

32

17,3

60,3

88

37,2

19,9

20

48,8

48,7

74

67

,614

,495

85,5

12,6

35

98

,803

,741

97

,105

,582

92

,602

,549

105,

125,

760

115,

806,

640

Exce

ss cr

ude o

il rev

enue

9,71

5,90

2

10,8

34,5

85

20,5

50,4

87

18,3

11,4

81

23,6

72,5

75

32,9

64,0

33

10

,102

,300

20

,885

,802

39

,479

,003

42

,240

,801

44

,959

,433

Othe

r misc

ellan

eous

reve

nue

13,1

39,4

42

-

13,1

39,4

42

-

-

-

-

-

-

-

-

Tota

l rec

urre

nt re

ceip

ts8.

1

51

,348

,016

36

,597

,540

87

,945

,557

84

,006

,853

109,

965,

930

14

0,81

4,59

6

138,

644,

076

152,

706,

988

169,

200,

872

190,

666,

891

210,

699,

051

Recu

rrent

exp

endi

ture

s:

Pers

onne

l cos

ts8,

163,

208

9,

786,

468

17

,949

,676

17

,949

,676

19,4

03,6

00

19

,403

,600

20,8

58,8

70

20,8

58,8

70

22,4

23,2

85

22

,423

,285

24

,105

,032

Co

nsol

idat

ed re

venu

e fun

d ch

arge

s9,

001,

462

9,

115,

538

18

,117

,000

22

,397

,571

16

,901

,512

18

,306

,389

19,7

87,9

30

21,4

05,5

44

23,1

75,1

76

25,1

15,2

84

20,4

21,4

39

Over

head

costs

10,0

63,5

55

18,1

17,7

38

28,1

81,2

93

29,5

90,3

58

31

,069

,876

32,6

23,3

69

34

,254

,538

35

,967

,265

37

,765

,628

39,6

53,9

09

41,6

36,6

05

Tota

l rec

urre

nt e

xpen

ditu

res

8.2

27,2

28,2

25

37,0

19,7

44

64,2

47,9

69

69,9

37,6

05

67

,374

,988

70,3

33,3

59

74

,901

,337

78

,231

,678

83

,364

,089

87,1

92,4

78

86,1

63,0

76

Surp

lus o

f Rev

enue

ove

r Ex

pend

iture

for t

he ye

ar24

,119

,791

(4

22,2

04)

23,6

97,5

88

14,0

69,2

49

42,5

90,9

42

70,4

81,2

38

63

,742

,739

74

,475

,310

85

,836

,783

10

3,47

4,41

3

12

4,53

5,97

5

CRF b

roug

ht fo

rwar

d(1

,169

,869

)

(43,

370,

453)

(1,1

69,8

69)

17

0,17

7

48

7,19

8

1,

921,

552

2,

775,

741

2,

769,

399

3,

163,

024

3,

112,

689

4,

338,

179

22,9

49,9

22

(43,

792,

657)

22,5

27,7

19

14,2

39,4

26

43

,078

,140

72,4

02,7

89

66

,518

,479

77

,244

,708

88

,999

,807

106,

587,

102

128,

874,

154

Appr

opria

tions

:

Repa

ymen

t of i

nter

nal lo

ans

(66,

263,

271)

(14,

231,

779)

(80,

495,

050)

(4

6,92

3,83

9)

(9

,381

,443

)

(6

,204

,905

)

(3,3

23,3

78)

(1,5

33,8

67)

-

-

-

Re

paym

ent o

f ext

erna

l loa

ns(5

7,10

4)

(100

,000

)

(1

57,1

04)

(157

,104

)

(1

57,1

04)

(157

,104

)

(157

,104

)

(157

,104

)

(157

,104

)

(1

57,1

04)

(157

,104

)

Tr

ansfe

r to

Sinkin

g Fu

nd fo

r Bon

d re

paym

ents

8.3

-

-

-

(8,6

87,5

00)

(1

4,89

2,85

7)

(1

4,89

2,85

7)

(1

4,89

2,85

7)

(1

4,89

2,85

7)

(1

4,89

2,85

7)

(1

4,89

2,85

7)

(6

,205

,357

)

Tran

sfer t

o Se

curit

y Fun

d8.

4-

-

-

(3

,345

,012

)

(4,3

34,6

18)

(5,3

72,1

82)

(6

,375

,742

)

(6

,497

,857

)

(6,3

37,1

57)

(7

,198

,962

)

(7,9

68,8

10)

Tr

ansfe

r to/

from

Cap

ital

Deve

lopm

ent F

und

-

-

58,2

94,6

13

45,3

61,2

27

(12,

390,

566)

(43,

000,

000)

(39,

000,

000)

(51,

000,

000)

(64,

500,

000)

(80,

000,

000)

(100

,000

,000

)

CRF c

arrie

d fo

rwar

d(4

3,37

0,45

3)

(5

8,12

4,43

6)

17

0,17

7

487,

198

1,92

1,55

2

2,77

5,74

1

2,76

9,39

9

3,16

3,02

4

3,11

2,68

9

4,33

8,17

9

14,5

42,8

83

<---

----

----

----

----

----

-

Pro

jecte

d fo

r the

year

s end

ing

31 D

ecem

ber

---

----

----

----

----

----

--->

FINANCIAL FORECASTS


6 .PR

OJECT

ED CA

PITAL

DEVE

LOPM

ENT F

UND (

CDF)

Actua

lPro

jected

Projec

ted6 m

onths

to6 m

onths

toyea

r end

ed30

-Jun

31-D

ec31

-Dec

2009

2009

2009

2010

2011

2012

2013

2014

2015

2016

2017

N'000

N'000

N'000

N'000

N'000

N'000

N'000

N'000

N'000

N'000

N'000

Capit

al rec

eipts:

Value

Adde

d Tax

(VAT

)1,9

38,72

5

2,026

,275

3,9

65,00

0

5,416

,831

5,5

79,31

3

5,964

,348

6,809

,098

7,7

73,50

3

8,874

,511

10

,131,4

73

11

,566,4

81

Bo

nd pr

oceed

s-

-

-

46

,000,0

00

-

-

-

-

-

-

-

Tra

nsfer

from

Conso

lidate

d Reve

nue

Fund

-

(58,29

4,613

)

(58

,294,6

13)

(45,36

1,227

)

12

,390,5

66

43

,000,0

00

39

,000,0

00

51

,000,0

00

64

,500,0

00

80

,000,0

00

10

0,000

,000

Intern

al loa

n8.5

63,04

8,001

-

63,04

8,001

-

-

-

-

-

-

-

-

Exter

nal lo

an-

-

-

-

-

-

-

-

-

-

-

Total

capit

al rece

ipts

64,98

6,726

(56,26

8,338

)

8,7

18,38

8

6,055

,604

17

,969,8

79

48

,964,3

48

45

,809,0

98

58

,773,5

03

73

,374,5

11

90

,131,4

73

11

1,566

,481

Capit

al ex

pend

itures

:Eco

nomi

c sect

or5,2

77,92

6

2,016

,429

7,2

94,35

5

4,620

,586

9,6

60,31

4

21,20

3,194

22,65

1,845

26,57

1,854

34,51

3,256

44,58

2,221

56,21

9,570

Socia

l servi

ce sec

tor6,8

29,78

3

549,3

22

7,379

,105

1,2

92,27

7

2,701

,778

5,9

30,06

8

6,3

35,22

4

7,4

31,56

5

9,6

52,60

1

12

,468,6

69

15

,723,3

81

En

viron

menta

l deve

lopme

nt sec

tor2,2

31,54

9

1,641

,780

3,8

73,32

9

1,738

,530

3,6

34,76

6

7,977

,862

8,522

,928

9,997

,861

12,98

5,873

16,77

4,397

21,15

3,038

Gene

ral ad

minis

tratio

n1,7

45,16

8

421,0

31

2,166

,199

1,6

45,56

1

3,440

,393

7,5

51,23

8

8,0

67,15

6

9,4

63,21

6

12

,291,4

41

15

,877,3

70

20

,021,8

59

Total

capit

al exp

endit

ure8.6

16,08

4,426

4,628

,563

20

,712,9

89

9,2

96,95

4

19,43

7,251

42,66

2,362

45,57

7,153

53,46

4,496

69,44

3,172

89,70

2,658

113,1

17,84

8

Net c

apita

l recei

pts/(e

xpen

diture

s)48

,902,3

00

(60

,896,9

01)

(11,99

4,601

)

(3,

241,3

50)

(1,46

7,372

)

6,3

01,98

5

23

1,945

5,3

09,00

7

3,9

31,33

9

42

8,815

(1,

551,3

67)

CDF b

rough

t forw

ard25

,971,9

29

74

,874,2

29

25

,971,9

29

13

,977,3

28

10

,735,9

78

9,2

68,60

6

15

,570,5

92

15

,802,5

37

21

,111,5

44

25

,042,8

82

25

,471,6

97

CDF c

arried

forw

ard74

,874,2

29

13

,977,3

28

13

,977,3

28

10

,735,9

78

9,2

68,60

6

15,57

0,592

15,80

2,537

21,11

1,544

25,04

2,882

25,47

1,697

23,92

0,330

<---

----

----

----

----

----

Proj

ected

for th

e year

s end

ing 31

Decem

ber

--

----

----

----

----

----

->

FINANCIAL FORECASTS


7 .

PRO

JECT

ED S

TATE

MEN

T O

F CA

SHFL

OW

S

Proj

ecte

dye

ar e

nded

Audi

ted

31-D

ec20

0820

0920

1020

1120

1220

1320

1420

1520

1620

17N '

000

N'00

0N'

000

N'00

0N'

000

N'00

0N'

000

N'00

0N'

000

N'00

0In

flow

s:St

atut

ory

allo

catio

n20

,130

,867

13

,505

,153

12

,634

,632

13,4

98,5

54

15

,966

,661

21,9

02,0

02

25

,078

,052

25,2

66,0

79

28,7

22,0

08

32

,003

,074

Va

lue

Adde

d Ta

x3,

664,

567

3,

965,

000

5,

416,

831

5,

579,

313

5,

964,

348

6,

809,

098

7,77

3,50

3

8,87

4,51

1

10,1

31,4

73

11

,566

,481

13

% M

iner

al re

venu

e65

,698

,003

37

,219

,920

48

,848

,774

67,6

14,4

95

85

,512

,635

98,8

03,7

41

97

,105

,582

92,6

02,5

49

105,

125,

760

115,

806,

640

Exce

ss c

rude

fund

61,7

77,2

52

20,5

50,4

87

18,3

11,4

81

23

,672

,575

32,9

64,0

33

10

,102

,300

20,8

85,8

02

39

,479

,003

42

,240

,801

44,9

59,4

33

Inte

rnal

ly G

ener

ated

Rev

enue

3,77

6,68

0

2,86

8,35

4

3,51

6,65

7

4,45

0,23

0

5,60

4,68

8

7,03

1,12

5

8,

792,

397

10

,965

,829

13

,646

,540

16,9

51,5

33

Oth

ers

534,

802

13,1

39,4

42

-

-

-

-

-

-

-

-

Tota

l inf

lows

155,

582,

171

91,2

48,3

56

88,7

28,3

74

11

4,81

5,16

8

146,

012,

364

14

4,64

8,26

6

159,

635,

336

177,

187,

971

199,

866,

581

221,

287,

161

Out

flow

s:Pe

rson

al e

mol

umen

ts18

,885

,169

17

,949

,676

17

,949

,676

19,4

03,6

00

19

,403

,600

20,8

58,8

70

20

,858

,870

22,4

23,2

85

22,4

23,2

85

24

,105

,032

Co

nsol

idat

ed re

venu

e fu

nd c

harg

es54

,740

,572

18

,117

,000

22

,397

,571

16

,901

,512

18

,306

,389

19

,787

,930

21,4

05,5

44

23,1

75,1

76

25,1

15,2

84

20,4

21,4

39

Ove

rhea

d co

sts

14,8

06,6

13

28,1

81,2

93

29,5

90,3

58

31

,069

,876

32,6

23,3

69

34

,254

,538

35,9

67,2

65

37

,765

,628

39

,653

,909

41,6

36,6

05

Econ

omic

sec

tor

24,0

83,9

75

7,29

4,35

5

4,62

0,58

6

9,66

0,31

4

21,2

03,1

94

22

,651

,845

26,5

71,8

54

34

,513

,256

44

,582

,221

56,2

19,5

70

Soci

al s

ecto

r11

,963

,691

7,

379,

105

1,

292,

277

2,

701,

778

5,

930,

068

6,

335,

224

7,43

1,56

5

9,65

2,60

1

12,4

68,6

69

15

,723

,381

En

viro

nmen

tal s

ecto

r5,

216,

219

3,

873,

329

1,

738,

530

3,

634,

766

7,

977,

862

8,

522,

928

9,99

7,86

1

12,9

85,8

73

16,7

74,3

97

21

,153

,038

Ge

nera

l adm

inis

trat

ion

5,20

9,63

7

2,16

6,19

9

1,64

5,56

1

3,44

0,39

3

7,55

1,23

8

8,06

7,15

6

9,

463,

216

12

,291

,441

15

,877

,370

20,0

21,8

59

Tota

l out

flows

134,

905,

876

84,9

60,9

58

79,2

34,5

58

86

,812

,239

112,

995,

721

12

0,47

8,49

1

131,

696,

174

152,

807,

261

176,

895,

135

199,

280,

924

Cash

flow

s fr

om in

vest

ing

activ

ities

:Sh

are/

secu

ritie

s ac

quis

ition

(776

,550

)

-

(1

,072

,506

)

(2,7

67,3

09)

(9

,211

,997

)

(6

,375

,742

)

(6

,497

,857

)

(6,3

37,1

57)

(7

,198

,962

)

(7,9

68,8

10)

1,

103,

667

66

2,20

0

69

5,31

0

73

0,07

6

76

6,58

0

80

4,90

8

84

5,15

4

88

7,41

2

93

1,78

2

97

8,37

1

32

7,11

7

66

2,20

0

(3

77,1

96)

(2,0

37,2

33)

(8

,445

,418

)

(5

,570

,834

)

(5

,652

,703

)

(5,4

49,7

45)

(6

,267

,180

)

(6,9

90,4

38)

Cash

flow

s fr

om fi

nanc

ing

activ

ities

:Pr

ocee

d fro

m lo

an a

nd o

ther

bor

rowi

ngs

5,00

0,00

0

63,0

48,0

01

-

-

-

-

-

-

-

-

Ne

t pro

ceed

from

Bon

d is

sue

(29,

770,

129)

-

46,0

00,0

00

-

-

-

-

-

-

-

Adva

nces

reco

vere

d2,

089,

352

-

10

0,00

0

14

8,35

6

-

-

-

-

-

-

Loan

ser

vici

ng &

repa

ymen

ts-

(8

0,65

2,15

4)

(4

7,08

0,94

3)

(9

,538

,547

)

(6,3

62,0

09)

(3,4

80,4

82)

(1,6

90,9

71)

(1

57,1

04)

(157

,104

)

(1

57,1

04)

Tran

sfer

to S

inki

ng F

und

for B

ond

repa

ymen

ts-

-

(8

,687

,500

)

(14,

892,

857)

(14,

892,

857)

(14,

892,

857)

(14,

892,

857)

(14,

892,

857)

(14,

892,

857)

(6,2

05,3

57)

(22,

680,

777)

(17,

604,

153)

(9,6

68,4

43)

(2

4,28

3,04

8)

(2

1,25

4,86

6)

(1

8,37

3,33

9)

(1

6,58

3,82

8)

(1

5,04

9,96

1)

(1

5,04

9,96

1)

(6

,362

,461

)

(1,6

77,3

65)

(1

0,65

4,55

5)

(5

51,8

23)

1,68

2,64

7

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FINANCIAL FORECASTS


8 . NOTES TO THE FINANCIAL PROJECTIONS

8.1 Recurrent revenues

- the effects of global crisis on oil prices and its implications for Nigeria’s revenue; and

8.2 Recurrent expenditures

- compliance with the Fiscal Responsibility Law; and

8.3 Sinking Fund Account

2010 2011 2012 2013 2014 2015 2016 2017N'm N'm N'm N'm N'm N'm N'm N'm

Balance b/f - 5,741 14,317 23,428 33,108 43,392 54,317 15,924

Annual ISPO deduction 8,687 14,893 14,893 14,893 14,893 14,893 14,893 6,205 8,687 20,634 29,210 38,321 48,001 58,285 69,210 22,129

Interest on investment 929 1,433 1,968 2,537 3,141 3,782 4,464 9,616 22,067 31,178 40,858 51,142 62,067 73,674 22,129

Repayments - Coupon (3,875) (7,750) (7,750) (7,750) (7,750) (7,750) (7,750) (3,875) - Principal - - - - - - (50,000)

Balance c/f 5,741 14,317 23,428 33,108 43,392 54,317 15,924 18,254

8.4 State Security Fund

8.5 Internal loans

8.6 Capital expenditures

Capital expenditures will be based on availability of fund during the projected period. However, preference will be given to a sharing ratio of49.7%, 13.9%, 18.7% and 17.5% in favour of economic sector, social sector, environmental development sector and general administrationrespectively.

- adoption of a strategy to allocate a fixed monthly sum of N1 million overheads for Ministries, Departments and Agencies (MDAs) in theState.

The State also anticipates a reduction in security spending in view of the success of the recent amnesty programme being put in place by theFederal Government.

An amount of N14.89 billion shall be set aside annually from the Consolidated Revenue Fund to a Sinking Fund account to be managed by theTrustees. Both principal and interest repayments shall be made from the Sinking Fund Account as follows:

Section 38 (3) of the Bayelsa State Fiscal Responsibility Law 2009 requires that 5% of the State's Federal Allocation Revenue (comprising ofstatutory allocation, VAT and mineral oil derivation) shall be transferred to a State Reserve Fund for savings purposes, which can only be spentby the State Executive Governor for specific purposes as may be authorised by the BYSG legislatures.

The internal loan obligations of the State amounted to N65.46 billion as at 30 June 2009. The State has an agreement with its principallenders to utilise an amount of N35 billion from the Bond proceeds to refinance part of the loan. The balance of the Bond proceeds after therefinancing will be utilised in completing infrastructure and other economic projects in the State.

The State has experienced a significant reduction in its revenues over the past eighteen (18) months due to the following reasons:

However, revenue generated from oil by the Federal Government is anticipated to improve during the projected period as relative stability isexpected in the region.

The Bayelsa State Government has embarked on several efforts aimed at enhancing the efficiency of its operations and enforcing fiscalresponsibility. In line with this, the State intends to control its expenditures during the projected period with a view to reduce inefficiencies ofprevious years. Some of the programs being implemented to achieve this will include:

- partnering with the World Bank towards a fiscally responsible expenditure process and development of a Medium-Term ExpenditureFramework. Through this program, the World Bank will monitor the State’s expenditure process and help to eliminate wastages;

- the reduction of oil production levels resulting in reduction of the State’s share of mineral derivation revenue due to the activities of NigerDelta militants.


Letter from the Financial Advisers and Issuing Houses The following is a copy of the letter from the Issuing Houses on the Revenue and Expenditure Projections: RC: 223042 RC: 286096

RC: 499243 RC: 125097 RC: 444999

June 22, 2010 The Executive Council Bayelsa State Government of Nigeria Yenagoa Bayelsa State Dear Sirs, BAYELSA STATE GOVERNMENT OF NIGERIA N50,000,000,000 FIXED RATE DEVELOPMENT BOND (“BOND ISSUE”) 2010/2017 We write with reference to the Prospectus issued in respect of the Offer for Subscription of N50,000,000,000 Fixed Rate Development Bond 2010/2017. The Prospectus contains the revenue and expenditure projection of the State for the eight years ending December 31, 2017. We have discussed with you and the Reporting Accountants, Akintola Williams Deloitte, the bases and assumptions upon which the projections were made. We have also considered the letter dated June 21, 2010 from the Reporting Accountants regarding the accounting bases and calculations upon which the projections were compiled. Having considered the assumptions made in preparing the forecast, as well as the accounting bases and calculations reviewed by the Reporting Accountants, we consider that the projections (for which you all as members of the Bayelsa State Executive Council are solely and fully responsible) have been made after due and careful enquiry.

Letter from the Financial Advisers and Issuing Houses


Yours faithfully,

Taiwo Okeowo Albert Okumagba Ariyo Olushekun Executive Director Managing Director/CEO Vice Chairman/CEO FBN Capital Limited BGL Plc Capital Assets Limited

Yemi Gbenro Chris Newson Gaventa Otono Managing Director/CEO Chief Executive Officer Managing Director/CEO Skye Financial Services Limited Stanbic IBTC Bank PLC Sterling Capital Markets Limited

Amadou Hott Chuka Eseka Managing Director/CEO Managing Director/CEO UBA Capital Limited Vetiva Capital Management Limited


21 June 2010

The Executive CouncilBayelsa State Government of NigeriaYenagoaBayelsa State

and

The Directors The DirectorsFBN Capital Limited and UBA Capital (Africa) Limited16, Keffi Street 57, MarinaSouth West Ikoyi LagosLagos

Gentlemen

Yours faithfully

Bosede A OdeloyeFor : Akintola Williams Deloitte

We have examined the audited financial statements of Bayelsa State of Nigeria (" the State") for the five years and six months ended 30 June 2009. Thefinancial statements were prepared on cash basis. The financial statements in respect of the accounting periods under review were audited by theAuditor-General of the State, who issued clean audit opinions on them. No audited financial statements of the State have been prepared for periodsubsequent to 30 June 2009.

Except for the observations contained in notes 6.1, 6.2 and 6.11; in our opinion, the financial information together with the notes thereon give a trueand fair view of the assets and liabilities, revenue and expenditure and the cash flows of Bayelsa State of Nigeria for the five years and six monthsended 30 June 2009.

The accompanying financial information is based on the audited financial statements of the State after making such adjustments as we considered

appropriate. The principal adjustments are stated in Note 6.14 to the financial information.

HISTORICAL FINANCIAL INFORMATION

Reporting Accountants Report



The significant accounting policies adopted by Bayelsa State of Nigeria are as follows:

(i) Basis of accounting

(ii) Investments

(iii) Revenue

The revenue of the State consists of the following:* Statutory allocation* Internally generated revenue (IGR)* Capital receipts.

(iv) Expenditure

The State's expenditure comprises:* Recurrent expenditure* Capital expenditure.

(v) Capital costs

These are recognised in the year of occurrence only.

(vi) Assets and liabilities

Assets and liabilities are stated at their net book value.

(vii) Foreign currencies

Investment in shares are held under the Ministry of Finance Incorporated (MOFI) and are stated at cost while bonus issues are added tothe number of units owned but not considered in value recognition. All investment income received are credited to ConsolidatedRevenue Fund account.

Transactions in foreign currencies are converted to Naira at the rates of exchange ruling at the dates of the transaction. Foreigncurrency balances are converted to Naira at the rates of exchange ruling at the statement of assets and liabilities date. Gains or lossesarising on translation when realised, are credited or debited to the Consolidated Revenue Fund.

The financial statements were prepared under the historical cost convention using the cash basis of accounting.

Statement of Accounting Policies


As at 30 June <----------------- As at 31 December ----------------->2009 2008 2007 2006 2005 2004

Notes N'000 N'000 N'000 N'000 N'000 N'000

ASSETS

Cash & bank balances 6.1 19,213,437 12,511,721 14,189,086 2,545,211 35,409,245 17,007,365

Investments 6.2 12,041,983 12,041,983 11,468,233 8,079,087 5,694,470 2,574,146

Advances 6.3 248,356 248,356 1,875,359 2,870,277 323,579 314,508

31,503,776 24,802,060 27,532,678 13,494,575 41,427,294 19,896,019

REPRESENTED BY:

Consolidated Revenue Fund (43,370,453) (1,169,869) (488,657) 9,336,050 39,721,446 9,765,437

Capital Development Fund 74,874,229 25,971,929 28,021,335 4,158,525 1,705,848 10,130,582

31,503,776 24,802,060 27,532,678 13,494,575 41,427,294 19,896,019

The accounting policies on page 61 and notes on pages 66 to 71 form part of these financial statements.

Statement of Asset and Liabilities


6 months ended30-Jun <-------------- Year ended 31 December -------------->

2009 2008 2007 2006 2005 2004Notes N'000 N'000 N'000 N'000 N'000 N'000

REVENUE

Internally generated revenue 6.4 1,239,749 3,558,333 1,764,345 2,729,475 964,416 1,020,302

Statutory allocation 6.5 7,393,391 20,130,866 16,206,041 14,965,291 12,759,595 12,124,442

13% Mineral resources revenue 6.6 19,859,532 65,698,005 57,689,058 78,097,215 73,114,653 47,396,470

Excess crude oil revenue 6.7 9,715,902 61,777,252 19,043,522 25,345,396 18,301,952 8,210,928

Other miscellaneous revenue 6.8 13,139,442 1,356,816 14,024,230 5,155,363 5,571,658 10,374

Total revenue 51,348,016 152,521,272 108,727,196 126,292,740 110,712,274 68,762,516

EXPENDITURE

Personnel costs 8,163,208 18,885,170 14,577,430 14,570,772 7,469,248 6,972,694

Consolidated revenue fund charges 6.9 9,001,462 14,806,613 19,395,384 8,105,413 3,875,764 3,574,057

Overhead costs 10,063,555 54,740,572 40,095,974 53,279,538 18,964,741 14,646,685

Total expenditure 27,228,225 88,432,355 74,068,788 75,955,723 30,309,753 25,193,436

Surplus of revenue over expenditure for the year 24,119,791 64,088,917 34,658,408 50,337,017 80,402,521 43,569,080

Consolidated Revenue Fund as at 1January (1,169,869) (488,657) 9,336,050 39,721,446 9,765,437 (302,743)

Appropriations:

Repayment of internal loans (66,263,271) (29,694,221) (6,179,485) (81,864) (181,331) (452,827)

Repayment of external loans (57,104) (75,908) (303,630) (640,549) (973,586) (1,048,073) Transfer to Capital Development

Fund (CDF) - (35,000,000) (38,000,000) (80,000,000) (49,291,595) (32,000,000)

Consolidated Revenue Fund as at 30June/31 December (43,370,453) (1,169,869) (488,657) 9,336,050 39,721,446 9,765,437


Statement of Consolidated Revenue Fund


4 . STATEMENT OF CAPITAL DEVELOPMENT FUND

6 months ended30-Jun <-------------- Year ended 31 December --------------->

2009 2008 2007 2006 2005 2004Notes N'000 N'000 N'000 N'000 N'000 N'000

Capital receipts:

Value Added Tax (VAT) 6.10 1,938,725 3,664,567 2,831,596 2,702,729 1,708,404 1,504,063

Transfer from Consolidated Revenue Fund (CRF) - 35,000,000 38,000,000 80,000,000 49,291,595 32,000,000

Internal loans 6.11 63,048,001 5,000,000 62,836,515 8,662,335 - -

External loans 6.12 - 259,549 533,662 648,004 471,048 154,727

Total Capital Receipts 64,986,726 43,924,116 104,201,773 92,013,068 51,471,047 33,658,790

Capital expenditures:

Economic sector 5,277,926 23,583,975 48,810,967 40,904,398 24,808,868 12,673,512

Social service sector 6,829,783 11,963,691 12,679,881 18,861,428 12,738,991 5,964,370

Environmental Development Sector 2,231,549 5,216,219 10,063,883 8,698,166 10,114,234 3,755,452

General Administration 1,745,168 5,209,637 8,784,232 21,096,399 12,233,688 7,063,870

16,084,426 45,973,522 80,338,963 89,560,391 59,895,781 29,457,204

Net capital (expenditure)/receipts 48,902,300 (2,049,406) 23,862,810 2,452,677 (8,424,734) 4,201,586

Capital Development Fund as at 1 January 25,971,929 28,021,335 4,158,525 1,705,848 10,130,582 5,928,996

Capital Development Fund as at 30 June/31 December 74,874,229 25,971,929 28,021,335 4,158,525 1,705,848 10,130,582



6 months ended30-Jun <------------ Year ended 31 December ------------>

2009 2008 2007 2006 2005 2004N'000 N'000 N'000 N'000 N'000 N'000

Cash flows from operating activities:

Receipts:Statutory allocation 7,393,391 20,130,867 16,206,041 14,965,290 12,759,595 12,124,442 Value Added Tax 1,938,725 3,664,567 2,831,596 2,702,728 1,708,405 1,504,065 13% Mineral revenue 19,859,532 65,698,003 57,689,058 78,097,217 73,114,653 47,396,469 Excess crude fund 9,715,902 61,777,252 26,335,742 25,345,396 18,301,950 2,000,237 Internally Generated Revenue 1,239,749 3,776,680 2,625,331 2,801,366 1,720,482 917,435 Miscellaneous I 13,049,003 34,802 5,540,669 3,637,648 4,452,888 6,210,692 Miscellaneous II - 500,000 - 20,000 338,980 - Total receipts 53,196,302 155,582,171 111,228,437 127,569,645 112,396,953 70,153,340

Payments:Personal emoluments 8,163,208 18,885,169 14,577,490 14,570,774 7,523,218 6,972,693 Overhead costs 9,001,462 54,740,572 40,095,975 53,279,538 18,964,741 14,646,686 Consolidated revenue fund charges 10,063,555 14,806,613 9,089,492 8,605,037 4,057,094 3,605,396 Economic sector 5,277,926 24,083,975 48,849,967 38,502,648 24,814,202 12,042,952 Social sector 6,829,783 11,963,691 12,679,881 18,861,428 12,738,991 5,970,585 Environmental sector 2,231,549 5,216,219 10,063,883 8,698,166 10,114,234 3,755,452 General administration 1,745,168 5,209,637 8,745,232 22,573,505 12,233,688 7,063,870

43,312,651 134,905,876 144,101,920 165,091,096 90,446,168 54,057,634

9,883,651 20,676,295 (32,873,483) (37,521,451) 21,950,785 16,095,706

Cash flows from investing activities:Share/securities acquisition - (776,550) (3,389,146) (2,401,750) (5,083,000) (2,184,625) Disposal of shares - - - - 1,683,000 -

90,439 1,103,667 330,415 1,425,824 362,704 113,240

90,439 327,117 (3,058,731) (975,926) (3,037,296) (2,071,385)

Cash flows from financing activities:Proceed from loan and other borrowin 63,048,001 5,000,000 63,370,178 9,310,340 471,048 154,727 Loan servicing & repayments (66,320,375) (29,770,129) (6,483,116) (592,618) (973,587) (1,469,562) Loans - 2,089,352 - (301,002) (32,762) (12,320) Hotel loans recovered - - 22,144 - - - Reimbursement to Federal Governmen - - (10,305,891) (528,000) - - Advances for the year - - (1,051,247) (2,321,520) - - Advances recovered - - 2,024,021 49,009 23,692 -

(3,272,374) (22,680,777) 47,576,089 5,616,209 (511,609) (1,327,155)

6,701,716 (1,677,365) 11,643,875 (32,881,168) 18,401,880 12,697,166

12,511,721 14,189,086 2,545,211 35,426,379 17,007,365 4,310,199

19,213,437 12,511,721 14,189,086 2,545,211 35,409,245 17,007,365

Net cash flows from/(to) operating activities

Cash & cash equivalents as at 1 January

Investment incomeNet cash flows from/(to) investing activities

Net cash flows (to)/ from financing activities

Net increase/(decrease) in cash and cash equivalents

Total payments

Cash & cash equivalents as at 30 June/ 31 December (note 6.1)

Statement of Cashflows


6 months ended30-Jun <------------- As at 31 December ------------->

2009 2008 2007 2006 2005 2004N'000 N'000 N'000 N'000 N'000 N'000

6.1

Cash & bank balances 11,377,167 5,598,475 14,150,029 1,545,211 23,182,058 10,777,168 Fixed deposits 7,836,270 6,913,246 39,057 1,000,000 12,227,187 6,230,197

19,213,437 12,511,721 14,189,086 2,545,211 35,409,245 17,007,365

6.2 INVESTMENTS

6.2.1 SummaryQuoted 8,297,703 8,297,703 8,224,910 5,324,617 3,978,524 2,378,199 Unquoted 3,744,280 3,744,280 3,243,323 2,754,470 1,715,946 195,947

12,041,983 12,041,983 11,468,233 8,079,087 5,694,470 2,574,146

6.2.2 Valuation of investments

6.3 ADVANCES

6.3.1 SummaryHotel loans (note 6.3.2) 248,356 248,356 246,356 280,000 - - Vehicle loans (note 6.3.3) - - - 280,257 323,579 314,508 Other advances (note 6.3.4) - - 1,629,003 2,310,020 - -

248,356 248,356 1,875,359 2,870,277 323,579 314,508

6.3.2 Hotel loans

6.3.3 Vehicle loans

6.3.4 Other advances

We were unable to confirm the existence and valuation of cash and bank balances totalling N16.10 billion in 2004, N17.97 billion in 2005, N 0.79billion in 2006, N2.21 billion in 2007, N2.53 billion in 2008 and N18.24 billion as at 30 June 2009.

The balances as at 31 December 2004, 2005 and 2006 represent vehicle loans given to state government staff. No details were provided in respect ofan amount of N236,785,445 brought forward from 1998, which was included in these balances.

Other advances of N2,310,020,000 and N1,629,002,635 in 2006 and 2007 respectively represent accumulated approvals given to Ministries forwhich payment vouchers were not raised.

In April 2006, the State Government approved a sum of N280.0 million as interest-free loans to certain hotels and restaurants in Yenagoa. This was toassist them in providing excellent services during the 2006 Africa Movie Academy (AMA) awards held in Yenagoa, Bayelsa State. While ten out of thetwelve beneficiaries received a sum of N25.0 million each, the remaining two received N15.0 million each. The repayment plan is for the hotels tomake a monthly repayment of N500,000 each for the next 20 months while the balance is to be recovered from hotel bills.

CASH AND BANK BALANCES

We were unable to determine the existence, ownership and valuation of investments as some share certificates and CSCS statements (for quotedinvestments) were not available for verification.

Notes to the Accounts


6 months ended30-Jun <----------- Year ended 31 December ----------->

2009 2008 2007 2006 2005 2004N'000 N'000 N'000 N'000 N'000 N'000

6.4 INTERNALLY GENERATED REVENUE

6.4.1 SummaryFines and fees 11,636 107,211 56,444 89,673 32,842 51,474 Earnings and sales 27,787 258,742 33,396 25,047 14,684 16,755 Rent on Government properties 9,668 7,679 7,155 17,730 9,695 9,523 Licence fees 4,637 17,924 26,709 16,094 6,853 8,405 Interest and dividends (note 6.4.2) 98,219 1,103,667 330,415 1,425,824 362,704 113,240 Taxes (direct and indirect) 1,087,802 2,063,110 1,310,226 1,155,107 537,638 820,905

1,239,749 3,558,333 1,764,345 2,729,475 964,416 1,020,302

6.4.2 Interest and dividendsInterest received on fixed deposits 7,780 272,173 114,411 1,306,876 305,082 95,122 Dividend income 90,439 831,494 216,004 118,948 57,622 18,118

98,219 1,103,667 330,415 1,425,824 362,704 113,240

6.5 STATUTORY ALLOCATION

January 1,604,914 1,440,892 1,120,254 1,256,242 1,140,240 981,232 February 1,255,647 1,311,405 1,248,834 1,216,062 1,101,582 982,618 March 1,122,572 1,351,673 1,325,490 1,379,354 1,052,167 928,981 April 1,052,623 2,039,717 1,260,704 1,093,104 1,026,057 840,264 May 1,032,352 1,724,666 1,082,420 1,115,120 1,014,242 924,880 June 1,325,283 1,625,428 1,225,921 1,302,867 1,052,242 1,096,879 July - 2,145,080 1,425,132 1,271,449 1,279,303 1,090,255 August - 1,679,630 1,581,702 1,197,846 1,110,710 1,110,627 September - 1,918,627 1,558,938 1,310,383 1,204,650 938,962 October - 1,708,513 1,258,634 1,228,115 950,112 1,023,454 November - 1,643,611 1,443,462 1,249,871 580,486 1,046,495 December - 1,541,624 1,674,550 1,344,878 1,247,804 1,159,795

7,393,391 20,130,866 16,206,041 14,965,291 12,759,595 12,124,442

6.6 13% MINERAL RESOURCES REVENUE

January 5,422,849 4,782,916 5,096,122 6,525,400 7,313,710 3,579,187 February 3,654,361 4,230,119 5,188,812 6,629,259 7,283,278 3,801,916 March 3,284,484 4,534,311 4,539,512 7,327,617 6,953,209 3,597,648 April 2,442,822 7,095,288 4,343,577 5,747,162 6,599,220 3,069,323 May 2,130,995 5,864,365 3,603,904 6,152,652 6,741,009 3,432,480 June 2,924,022 5,399,119 4,046,149 6,582,106 5,477,746 4,210,860 July - 7,014,495 4,713,054 6,699,637 6,594,062 4,205,010 August - 5,270,461 5,132,371 6,133,458 5,752,861 4,014,521 September - 6,117,720 5,220,497 6,688,597 6,009,899 3,394,803 October - 5,651,012 3,767,496 6,008,504 4,822,710 4,087,762 November - 5,164,386 6,326,303 6,554,472 3,099,493 4,159,468 December - 4,573,813 5,711,261 7,048,351 6,467,456 5,843,492

19,859,532 65,698,005 57,689,058 78,097,215 73,114,653 47,396,470

Notes to the Accounts (Contd)



6 months ended30-Jun <----------- Year ended 31 December ----------->

2009 2008 2007 2006 2005 2004N'000 N'000 N'000 N'000 N'000 N'000

6.7 EXCESS CRUDE OIL REVENUE

January 2,301,602 - - - 4,452,888 733,444 February - - - - 2,302,631 - March - 5,821,797 6,242,368 - 1,151,272 733,444 April - - 1,550,550 2,794,216 1,697,478 - May 4,928,985 9,524,146 2,205,958 2,370,400 - 326,176 June 2,485,315 37,030,001 1,989,463 - 2,302,543 - July - - 3,258,351 10,090,390 - - August - 1,976,614 1,252,169 - 1,151,446 - September - 789,444 76,727 - 2,302,893 533,349 October - 1,802,978 1,618,570 10,090,390 1,122,021 - November - 2,151,897 849,366 - 135,749 1,141,417 December - 2,680,375 - - 1,683,031 4,743,098

9,715,902 61,777,252 19,043,522 25,345,396 18,301,952 8,210,928

6.8 MISCELLANEOUS RECEIPTS

6.8.1 SummaryRefund from Paris Club (note 6.8.2) - 34,802 5,481,105 - - - Pensions to FG retirees - - 59,505 - - - Ecological Fund - - - 20,000 - - Net Statutory & Mineral revenue - - - 3,637,648 - - Soku distribution (note 6.8.3) - - 7,292,219 - - - Escrow account - - - - 4,452,888 - Recovery fund 12,744,050 - - - - - Bim Tax/Levy 390,164 1,322,014 1,029,360 1,468,407 892,394 - Miscellaneous 5,228 - 162,041 29,308 226,376 10,374

13,139,442 1,356,816 14,024,230 5,155,363 5,571,658 10,374

6.8.2 Refund from Paris Club

6.8.3 Soku Distribution

6.9 CONSOLIDATED REVENUE FUND CHARGES

Statutory transfer to local government 1,299,685 5,907,638 3,327,428 3,722,334 1,613,693 1,552,000 Contribution to State Primary Education Board 1,164,880 2,940,854 794,250 314,414 269,224 253,610 Pensions and gratuities 1,435,119 2,641,746 1,773,524 1,468,487 974,707 864,229 Bank charges 2,038,597 2,572,812 2,768,463 2,034,867 843,346 801,118 Other charges 3,063,181 743,563 10,731,719 565,311 174,794 103,100

9,001,462 14,806,613 19,395,384 8,105,413 3,875,764 3,574,057

During the year ended 31 December 2007, the State earned a revenue of N5.48 billion (US$46,079,253) through a direct credit byFederation Account Allocation Committee (FAAC). The revenue was in respect of the refund of excess deduction of foreign debts and theState share of the debt exit relief granted by Paris Club, which was translated at the rate of N115.96/US$1.00.

The receipt of N7.29 billion in 2007 was in respect of the disputed Soku Oil fields between Bayelsa and Rivers States, which were ceded toBayelsa State.

Notes to the Accounts (contd)



6 months ended30-Jun <------------ Year ended 31 December ------------>

2009 2008 2007 2006 2005 2004N'000 N'000 N'000 N'000 N'000 N'000

6.10 VAT RECEIPTS

January 274,034 312,484 260,040 - 162,547 135,166 February 398,559 299,144 276,705 642,961 130,117 94,688 March 307,862 291,095 202,438 - 222,396 120,601 April 321,054 321,859 - 81,254 172,538 126,788 May 276,030 252,158 178,589 131,934 148,627 116,036 June 361,186 320,290 453,319 511,239 170,097 102,336 July - 334,431 176,804 185,879 132,682 114,337 August - 332,914 281,479 161,225 143,761 145,158 September - 336,792 199,394 - 230,108 140,968 October - 254,638 299,339 253,607 - 136,449 November - 294,275 251,755 303,424 195,531 123,304 December - 314,487 251,734 431,206 - 148,232

1,938,725 3,664,567 2,831,596 2,702,729 1,708,404 1,504,063

As at 30 June <--------------- As at 31 December --------------->2009 2008 2007 2006 2005 2004

N'000 N'000 N'000 N'000 N'000 N'000

6.11 INTERNAL LOANS

6.11.1 SummaryBalance as at 1 January 62,634,430 73,505,231 9,796,369 - 119,607 541,096 Additions per CDF 63,048,001 5,000,000 62,836,515 8,662,335 - - Repayments (66,263,271) (29,694,221) (6,179,485) (81,864) (181,331) (452,827) Unreconciled differences (note 6.11.4) 6,037,096 13,823,420 7,051,832 1,215,898 61,724 31,338

65,456,256 62,634,430 73,505,231 9,796,369 - 119,607

6.11.2 Analysis by lender

Oceanic International Bank Plc - 30,065,500 41,450,000 - - 119,607

Oceanic International Bank Plc-CCDA (note 6.11.3) - 14,475,916 9,355,231 8,662,335 - - Equitorial Trust Bank Limited 4,986,107 4,482,214 6,000,000 - - - Bank PHB Plc 3,977,465 4,560,799 6,000,000 - - - Intercontinental Bank Plc 265,827 4,050,000 5,700,000 1,134,034 - - First Bank of Nigeria Plc 56,226,857 5,000,000 5,000,000 - - -

65,456,256 62,634,429 73,505,231 9,796,369 - 119,607

6.11.3 Oceanic International Bank Plc - CCDA

6.11.4 Unreconciled differences

During the year ended 31 December 2006, the Capital City Development Authority took a loan of N8,662,335,423 from Oceanic Bank International Plc on behalf of theState Government for the financing of capital projects.

We were unable to reconcile the differences of N0.03 billion, N0.06 billion, N1.21 billion, N7.05 billion, N13.82 billionand N6.04 billion in the movement on internalloans for the years ended 31 December 2004, 2005, 2006, 2007, 2008 and 30 June 2009 respectively, due to inconsistent information provided in the audited financialstatements for the relevant years. Confirmation was received from Bank PHB Plc in respect of oustanding balances as at 31 December 2007 and 2008. No confirmation ofbalances was received from the other lenders.




As at 30 June <-------------- As at 31 December -------------->2009 2008 2007 2006 2005 2004

N'000 N'000 N'000 N'000 N'000 N'000

6.12 EXTERNAL LOANS

6.12.1 Analysis by lenderMultilateral debts 3,708,060 3,584,643 3,098,623 2,125,339 1,286,104 1,541,237 London Club - - - 5,210,118 5,052,236 5,674,049 Paris Club - - - - - 15,800,484 World Bank (note 6.12.2) 2,243,221 2,243,221 1,807,441 1,273,779 625,775 154,727

5,951,281 5,827,864 4,906,064 8,609,236 6,964,115 23,170,497

6.12.2 World Bank loan

US$'000Health Systems Development Project 5,000 Local Empowerment Environmental Management Project (LEEMP) 7,000 Universal Basic Education (UBE) 5,000

17,000

As at 30 June 2009, undrawn balance on the World Bank loan amounted to US$944,416.57.

6.12.3 Confirmation of external debts

6.12.4 Exchange rate

US$1:N146 US$1:N146 US$1:N130 US$1:N130 US$1:N139 US$1:N139

6.13 COMMITMENTS AND CONTINGENCIES

Claims and litigation

The balances on Multilateral, London Club and Paris Club debts as shown in note 6.12.1 above were based on the confirmation dated 20 November2009 received from Debt Management Office (DMO) in respect of Bayelsa State external debts. No confirmation was received in respect of World Bankdebts.

As at 18 June 2010, there are fifty-four (54) civil litigation matters with values of N5,000,000 and above instituted against the State Government, withtotal claims amounting to about N10,054,737,358 (excluding interest), while the total counterclaim by the State is about N245,270,096. However,both the State Executive Council and the Joint Solicitors to the offer are of the opinion that none of the claims is likely to have any material adverseeffect on the State and the Offer.

External loans were in US Dollars andhave been converted to the Naira at thefollowing exchange rates as atperiod/each year end:

The World Bank credit facility with a limit of US$17 million is repayable within thirty (30) years with a moratorium of five (5) years and it was obtainedto finance the following projects:

Notes to the Accounts (Contd)



As at 30 June <----------- As at 31 December ------------>2009 2008 2007 2006 2005 2004

N'000 N'000 N'000 N'000 N'000 N'0006.14 STATEMENT OF ADJUSTMENTS

6.14.1Cash & bank balances

Per audited financial statements 19,213,437 12,511,721 14,189,086 2,545,211 36,903,485 17,007,365

Adjustment:

- - - - (1,494,240) -

19,213,437 12,511,721 14,189,086 2,545,211 35,409,245 17,007,365

6.14.2Consolidated Revenue Fund (CRF)

Per audited financial statements (42,477,289) (276,705) 404,507 10,229,214 42,108,850 10,658,601

Adjustments:

(1,504,065) (1,504,065) (1,504,065) (1,504,065) (1,504,065) (1,504,065)

610,901 610,901 610,901 610,901 610,901 610,901

- - - (1,494,240) -

(43,370,453) (1,169,869) (488,657) 9,336,050 39,721,446 9,765,437

6.14.3Capital Development Fund (CDF)

Per audited financial statements 10,933,063 25,078,765 27,128,171 3,265,361 812,684 9,237,418

Adjustments:

(610,901) (610,901) (610,901) (610,901) (610,901) (610,901)

- 500,000 39,000 - 5,334 -

- (500,000) (39,000) - (5,334) -

1,504,065 1,504,065 1,504,065 1,504,065 1,504,065 1,504,065

Internal loans taken during the period 63,048,002 - - - - -

74,874,229 25,971,929 28,021,335 4,158,525 1,705,848 10,130,582

Adjustment for casting errors in CDF

Adjustment for casting errors in CDF

Reversal of duplication of VAT (Capital receipt) in CRF and CDF

Reversal of duplication of VAT (Capital receipt) in CRF and CDF

Reversal of overstatement in balance transferred from CRF

Adjustment for unpresented cheques in 2005

Reversal of overstatement in balance transferred from CRF

Adjustment for unpresented cheques in 2005



RISKS & MITIGATING FACTORS An investment in the Bonds may involve a high degree of risk. Accordingly, prospective investors should carefully consider the following risk factors together with all the other information included in this Prospectus before purchasing the Bonds. The risks outlined below are by no means exhaustive, and are not the only risks facing the State. Additional risks and uncertainties that are currently considered immaterial may also materially and adversely affect the State in the future, should market conditions deteriorate. Any of the following risks could result in a material adverse effect on the State’s financial condition, and ability to service its debt obligations, including the Bonds. Risks Related to Nigeria and the West African Sub region

A. Political and regional instability in the Niger Delta region. Oil exportation is the major source of government revenue to Nigeria and Nigeria’s major oil producing area is the Niger Delta region. Up until the last quarter of 2009, there have been political disturbances and intermittent kidnappings for ransom in the Niger Delta region which substantially affected the country’s oil production. Though these incidents have reduced drastically, their resurgence could adversely affect oil production and economic activity in the main oil producing region of Nigeria

Mitigating Factor Although, the political and regional instability in the Niger Delta region has had a material adverse effect on investment and confidence in, and the performance of, the Nigerian economy, the Federal Government has embarked on a number of initiatives to address the instability and unrest in the region. Part of these initiatives include granting unconditional amnesty to former militants who surrendered their arms and ammunition by 04 October 2009, and a proposal to offer a 10% equity stake to host communities in all joint venture businesses that the FGN is a party to.

B. Global price of oil has significant impact on the Nigerian economy.

The Nigerian economy is almost solely dependent on its oil sector which accounts for 95% of the country’s total export earnings. Any changes in oil production or global price of oil will have wide reaching impact on all other sectors of the Nigerian economy.

Mitigating Factor The Jonathan administration remains committed to economic reforms aimed at diversifying Nigeria’s economy and increasing macroeconomic stability whilst promoting a private sector market-driven economy. In addition, the government’s annual budget is pegged at a rate lower than the average trading price of crude oil. This reduces the country’s exposure to the volatility in oil price.

C. Emerging markets such as Nigeria are subject to greater risks than more developed markets, and

financial turmoil in any emerging market could cause the price of the Bonds to decrease. Generally, investment in emerging markets is only suitable for sophisticated investors who fully appreciate the significance of the risks involved in, and are familiar with, investing in emerging markets. Investors should also note that emerging markets such as Nigeria are subject to rapid change and that the information set forth in this Prospectus may become outdated relatively quickly.

Moreover, financial turmoil in any emerging market country tends to adversely affect prices in equity markets of all emerging market countries as investors move their money to more stable, developed markets. As has happened in the past, financial problems or an increase in the perceived risks associated with investing in emerging economies could dampen foreign investment in Nigeria and adversely affect the Nigerian economy. Thus, even if the Nigerian economy remains relatively stable, financial turmoil in any emerging market country could result in a decrease in the price of the Bonds.

RISKS & MITIGATING FACTORS


Risks Related to the Bond Offering

A. The need to determine the suitability of the investment in line with investors’ objectives Each potential Investor in the Bonds must determine the suitability of that investment generally in light of his or her own circumstances. In particular, each potential investor should: (i) have sufficient knowledge and experience to make a meaningful evaluation of the Bonds, the

merits and risks of investing in the Bonds and the information contained in this Prospectus; (ii) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of his

or her particular financial situation, an investment in the Bonds and the impact such investment will have on its overall investment portfolio;

(iii) have sufficient financial resources and liquidity to bear all of the risks of an investment in the Bonds, including where the potential Investor’s currency is not the Nigerian Naira.

(iv) understand thoroughly the terms of the Bonds; and (v) be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for

economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks.

B. Negative Change in the Bond’s Credit Rating.

Nigerian sovereign Bonds are rated BB- by Fitch and B+ by Standard & Poors. A credit rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the assigning rating organization. Any negative change in the Bonds’ credit rating could materially and adversely affect the market price of the Bonds.

C. Change of law.

The conditions of the Bonds are based on Nigerian law in effect as at the date of this Prospectus. No assurance can be given as to the impact of any possible judicial decision or change to Nigerian law or administrative practice after the date of issue of the Bonds.

Risks relating to the market generally Set out below is a brief description of certain market risks, including liquidity risk, price volatility risk, general emerging market risks, environmental risk, credit risk, exchange rate risk, currency risk and interest rate risk.

A. There is no active trading market for the Bonds. There is no active trading market for the Bonds when issued and if such a market does develop, it may not be very liquid. Therefore, Investors may not be able to sell their Bonds easily or at prices that will provide them with a yield comparable to similar investments that have a developed secondary market. However an OTC market exists for state government bonds, and the continuous development and deepening of the Bond market will help ensure that the Bond has liquidity.

B. The market price of the Bonds may be volatile.

The market price of the Bonds could be subject to significant fluctuations in response to actual or anticipated variations in the Nigerian economic environment. In addition, in recent years the global financial markets have experienced significant price and volume fluctuations, which, if repeated in the future, could adversely affect the market price of the Bond without regard to the State’s performance, prospects or financial condition.

C. Financial turmoil in emerging markets may lead to unstable pricing of the Bonds.

The market price of the Bonds is influenced by economic and market conditions in Nigeria and, to a varying degree, economic and market conditions in other African and emerging markets generally.


Financial turmoil in other emerging markets in the past has adversely affected market prices in the world’s securities markets for issuers in those developing economies. Even if the Nigerian economy remains relatively stable, financial turmoil in other emerging markets could materially and adversely affect the market price of the Bonds.

D. Interest rate risks

An investment in the Bonds involves the risk that subsequent changes in market interest rates may adversely affect the value of the Bonds.

E. Credit ratings may not reflect all risks.

The Bonds are rated locally by Agusto and Co. These ratings may not reflect the potential impact of all risks related to structure, market and the additional factors discussed above, and other factors that may affect the value of the Bonds. A credit rating is not a recommendation to buy, sell or hold securities and may be revised or withdrawn by the rating agency at any time.

F. Legal investment considerations may restrict certain investments.

The investment activities of certain Investors are subject to legal investment laws and regulations, or review or regulation by certain authorities. Each potential Investor should consult its legal advisers to determine whether and to what extent (i) the Bonds are legal investments for it, (ii) the Bonds can be used as collateral for various types of borrowing and (iii) other restrictions apply to its purchase or pledge of the Bonds. Financial institutions should consult their legal advisers or the appropriate regulators to determine the appropriate treatment of the Bonds under any applicable risk based capital adequacy or similar rules.


STATUTORY AND GENERAL INFORMATION

Statement of Indebtedness Save as disclosed herein, the State had no outstanding debentures, mortgages, loan capital, overdrafts, short term loans, charges or similar indebtedness or material contingent liabilities other than those arising from the ordinary course of governance. However, as at June 30, 2009, the total loans and overdraft of the State was N71,407,537,000.00.

Claims, Litigation & Disputes The State is currently involved in fifty Four (54) civil litigation matters instituted against the State, which involve claims of at least N 5,000,000 (Five Million Naira). The total amount claimed in these matters is approximately N 10,054,737,358.11 (excluding interest), while the total sum counterclaimed by the State is approximately N245,270,096.52 (excluding interest). The Joint Solicitors to the Offer are of the opinion that the State’s actual liability in the 54 cases will be as eventually established, found and determined by the Courts, upon conclusion of the matters. However, based on their consideration of the merits of the cases, their experience in litigation matters and their understanding of the disposition of Nigerian courts in awarding damages, the Joint Solicitors to the Offer are also of the opinion that majority of the sums claimed in the foregoing cases are exaggerated and would most likely be unsubstantiated.

Pursuant to the forgoing, the Joint Solicitors to the Offer are of the opinion that the liability that may accrue to the State from the cases reviewed by them would not have any material adverse effect on the Offer.

The members of the State’s Executive Council are of the opinion that the aforementioned cases are not likely to have any material adverse effect on the state and or the Offer.

Material Contracts • A Vending Agreement dated June 28, 2010 between the Bayelsa State Government on the one part and FBN

Capital, BGL, Capital Asset, Skye Financial, Stanbic IBTC, Sterling Capital, UBA Capital and Vetiva Capital on the other part by which the latter had agreed to Issue N50,000,000,000 Bayelsa State 13.75% Fixed Rate Bond 2010/2017 on behalf of the State

• An Underwriting Agreement dated June 28, 2010 between the Bayelsa State Government on the one part and FBN Capital, BGL, Capital Asset, Skye Financial, Stanbic IBTC, Sterling Capital, UBA and Vetiva Capital on the other part by which the latter had agreed to underwrite the N50,000,000,000 Bayelsa State 13.75% Fixed Rate Bond 2010/2017 on a hundred (100%) firm commitment basis.

• A Trust Deed dated June 28, 2010 between the Bayelsa State Government on the one part and First Trustees Nigeria Limited Skye Trustees Limited and UBA Trustees Limited on the other part by which the latter had agreed to manage, effect and co-ordinate the N50,000,000,000 Bayelsa State 13.75% Fixed Rate Bond 2010/2017 on behalf of the State.

• A N50,000,000,000 loan facility from First Bank of Nigeria Plc to the Bayelsa State Government to refinance its existing facilities with other banks namely Oceanic Bank, ETB, Intercontinental Bank and Bank PHB.

Save as disclosed above, the Issuer has not entered into any contract which may be deemed material in connection with the issue.

Relationship between the Issuer & Advisers

Apart from the relationship between the Attorney General of the State and the Solicitors to the Trustee, George-Ikoli & Okagbue, there is no other relationship between the Issuer and any of its advisers as at the date of this Prospectus except in the ordinary course of business.

Costs & Expenses The cost, charges and expenses of and incidental to the Issue, including fees payable to SEC, the NSE, professional parties fees, brokerage commission, underwriting commission (representing N1.5Billion at 3.0% flat of amount underwritten) and printing and distribution expenses are estimated at N3,517,465,000 amounting to 7.03% of the gross Issue proceeds. These costs are payable by the State and deductible from the proceeds of the Issue.



Extracts of the Trust Deed 3. APPOINTMENT OF TRUSTEES AND CREATION OF SECURITY INTEREST 3.1 The Trustees are hereby appointed as the representatives of the Holders in accordance with the

provisions of this Deed. 3.2 Pursuant to the provisions of this Deed, and in furtherance thereof, the Issuer hereby assigns, transfers,

pledges, grants and conveys to the Trustees for the benefit of the Holders, a security interest in the Pledged Revenues, to secure the payment and performance in full of all its obligations hereunder.

3.3 The security interest created above shall be a continuing security and shall be of full force and effect until the satisfaction, performance and discharge of all of the Issuer’s obligations stated herein. The term “obligations” as used herein, means all of the indebtedness, obligations and liabilities of the Issuer to the Holders, individually or collectively, whether direct or indirect, joint or several, absolute or contingent, due or to become due or hereafter arising under or in respect of the Issue.

3.4 Without prejudice to the generality of the foregoing and the provisions of Clause 9 of this Deed, the security interest created herein shall be a first charge and shall rank prior to any other secured obligations of the Issuer and shall not be subordinated to any present and/or future indebtedness of the Issuer.

4. ACCEPTANCE OF TRUST 4.1 By execution hereof, the Trustees have accepted and agreed to be bound by the powers, duties and

obligations of the Trustees specifically set forth herein. 4.2 The Trustees shall have no duty, responsibility or obligation for the issuance of the Bonds or for the

validity or exactness thereof, or of any document relating to such issuance. 4.3 The Trustees shall have no duty, responsibility or obligation for the payment of Bonds except in

accordance with the terms and provisions hereof or any agreement to which they are party, and only to the extent of the Sinking Fund held in trust by the Trustees for the purpose of such payment.

4.4 Prior to an Event of Default and after the curing or waiving of all Events of Default which may have occurred, the Trustees shall not be liable except for the performance of such duties as specifically set down herein.

4.9 Notwithstanding any other provisions hereof, a Trustee shall have no liability for (a) an error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts or (b) action taken or omitted to be taken by it in good faith in accordance with the lawful direction of the Holders of not less than a majority in principal amount of Bonds then outstanding.

5. CREATION OF SINKING FUND

5.1.1 Pursuant to the provisions of the Law, there is hereby established a Sinking Fund, to be

administered by the Trustees in respect of the Issue. The amounts standing to the credit of the Sinking Fund from time to time shall be applied to meet the obligations of the Issuer as follows: (i) Coupon Payments; (ii) Principal repayment at Maturity or Early Redemption (as the case may be); and (iii) Trustees’ fees and expenses. Amounts in the Sinking Fund shall be pledged to the Holders.

5.1.2 The State shall not later than the allotment date cause payments to be made to an account

established by the Trustees titled the Sinking Fund Account. The State shall irrevocably authorize the Accountant-General of the Federation or any public officer for the time being in charge of the Distributable Pool of the Consolidated Revenue of the Federation to deduct, as a first charge on the State’s share of the Federation Account and to place to the credit of the Sinking Fund Account, the sum of N1,241,107,428.57 (One billion, Two Hundred and Forty-one Million, One Hundred and Seven Thousand, Four Hundred and Twenty-eight Naira, Fifty-seven Kobo Only) from the revenue of the State as shown in the schedule set out hereunder from time to time which sum



shall be applied towards the payment of interest and the redemption, at par of the Bond PROVIDED THAT where the amount being credited to the account is not sufficient to meet interest and principal repayment due to the bond at any time, the Trustees shall ask the State to increase the amount being credited to the account.

Month

Monthly Deduction/Remittance (N) Month

Monthly Deduction/Remittance (N) Month

Monthly Deduction/Remittance (N)

1 1,241,107,428.57 29 1,241,107,428.57 57 1,241,107,428.57 2 1,241,107,428.57 30 1,241,107,428.57 58 1,241,107,428.57 3 1,241,107,428.57 31 1,241,107,428.57 59 1,241,107,428.57 4 1,241,107,428.57 32 1,241,107,428.57 60 1,241,107,428.57 5 1,241,107,428.57 33 1,241,107,428.57 61 1,241,107,428.57 6 1,241,107,428.57 34 1,241,107,428.57 62 1,241,107,428.57 7 1,241,107,428.57 35 1,241,107,428.57 63 1,241,107,428.57 8 1,241,107,428.57 36 1,241,107,428.57 64 1,241,107,428.57 9 1,241,107,428.57 37 1,241,107,428.57 65 1,241,107,428.57

10 1,241,107,428.57 38 1,241,107,428.57 66 1,241,107,428.57 11 1,241,107,428.57 39 1,241,107,428.57 67 1,241,107,428.57 12 1,241,107,428.57 40 1,241,107,428.57 68 1,241,107,428.57 13 1,241,107,428.57 41 1,241,107,428.57 69 1,241,107,428.57 14 1,241,107,428.57 42 1,241,107,428.57 70 1,241,107,428.57 15 1,241,107,428.57 43 1,241,107,428.57 71 1,241,107,428.57 16 1,241,107,428.57 44 1,241,107,428.57 72 1,241,107,428.57 17 1,241,107,428.57 45 1,241,107,428.57 73 1,241,107,428.57 18 1,241,107,428.57 46 1,241,107,428.57 74 1,241,107,428.57 19 1,241,107,428.57 47 1,241,107,428.57 75 1,241,107,428.57 20 1,241,107,428.57 48 1,241,107,428.57 76 1,241,107,428.57 21 1,241,107,428.57 49 1,241,107,428.57 77 1,241,107,428.57 22 1,241,107,428.57 50 1,241,107,428.57 78 1,241,107,428.57 23 1,241,107,428.57 51 1,241,107,428.57 79 1,241,107,428.57 24 1,241,107,428.57 52 1,241,107,428.57 80 1,241,107,428.57 25 1,241,107,428.57 53 1,241,107,428.57 81 1,241,107,428.57 26 1,241,107,428.57 54 1,241,107,428.57 82 1,241,107,428.57 27 1,241,107,428.57 55 1,241,107,428.57 83 1,241,107,428.57

28 1,241,107,428.57 56 1,241,107,428.57 84 1,241,107,428.57



6. TERMS OF THE BONDS 6.1 Issuance 6.1.1 The Issuer may issue Bonds in accordance with the Offer Documents and to the extent provided by the

Law and the resolution of the Executive Council. 6.2 Terms: a) Amount of Bonds: The Aggregate Principal Amount of Bonds issued pursuant hereto (the Issue) is N 50

Billion comprising 50 million registered Bonds at a par value of N 1,000 (One Thousand Naira) each. b) Type of Bonds: Fixed Rate Bonds. c) Status of Bonds: The Bonds constitute senior and direct obligations of the State. The Bonds are

guaranteed by an ISPO approved by the Federal Ministry of Finance and acknowledged by the Accountant General of the Federation. The Bonds qualify as securities in which trustees and pension fund administrators may invest under the Trustees Investment Act Cap. T22 LFN 2004 and the Pension Reform Act Cap P4 LFN 2004 respectively.

d) Minimum Subscription: The minimum subscription amount for the Bonds is 1,000 and multiples of 100 thereafter.

e) Tenor: (Seven) 7 years. f) Tax Considerations: The Bonds shall be exempt from all forms of taxation in the Federal Republic of

Nigeria. Accordingly, all payments made to Holders shall be free and clear of withholding, or any deductions at source or otherwise and/or State and Federal income and capital gains or other taxes.

g) Coupon Payment: (i) The Coupon shall be payable semi-annually in arrears in equal payments on each Coupon Payment

Date up to and including the Maturity Date. The Coupon Payment Date shall be six months intervals from the date of allocation of the bond of every year, up till the Maturity date, that is, 7 years from the Allotment Date.

(ii) The initial coupon shall be paid Six months from . (iii) The Coupon rate payable on the Bonds shall be 13.75% fixed rate per annum (“Coupon Rate”). (iv) The Coupon Payment shall be determined as follows: Coupon Payment = Principal Amount of Bonds x 13.75% (v) The Trustees shall apply the monies in the Sinking Fund Account for Coupon Payments to the

Holders on the Coupon Payment Dates and repayment of principal on the Maturity Date. 6.3 Redemption 6.3.1 The Aggregate Principal Amount and any Coupon (accrued up to but unpaid as of the Maturity Date)

shall be paid in one bullet on the Maturity Date. 6.4 Delivery of Certificate 0.4.1 At least seven (7) days before the Maturity Date, each Holder shall be bound to deliver to the Registrar

the certificate(s) for its Bonds being redeemed and upon such delivery the Registrar shall pay to such Holder the amount payable to him in respect of such redemption together with the Coupon accrued thereon.

6.5 Utilisation of Bond Proceeds 6.5.1 The Issuer shall apply the net proceeds of the Bonds in furtherance of the purposes set out in the Offer

Documents. 6.5.2 The Trustees shall not be bound to enquire as to the application by the Issuer of the proceeds of the

Issue nor shall they be responsible for such application or for the consequence of such application.



6.6 Form of Bonds 6.6.1 The Bonds shall be in substantially the form set forth as Schedule 1 to this Deed or upon application by

the Holder, in electronic/dematerialised form held with the Central Securities Clearing System (the CSCS).

6.7 Persons Deemed Owners 6.7.1 Except as may subsequently be agreed between the Parties, the Holder (or his legal representative) shall

be deemed and regarded as the absolute owner of the Bonds registered in its name for all purposes including but not limited to the payment of principal, premium (if any), and coupon.

6.8 Medium and Place of Payment (a) The principal, premium (if any), and coupon on the Bonds shall be payable in the official currency of the

Federal Republic of Nigeria, which at the respective dates of payment thereof, is legal tender for the payment of public and private debts.

(b) Payment of the principal, premium and coupon shall be made by the Trustees in the manner specified herein.

(c) Any payment made pursuant to (a) and (b) above shall be deemed valid and shall satisfy and discharge the Government of any obligation to make payment on such Bond to the extent of the amount paid.

(d) The Issuer shall ensure that monies are deposited into the Sinking Fund in accordance with the terms of this Deed. Any payment by the Issuer into the Sinking Fund shall discharge the State’s payment obligation in respect of the Bonds to the extent of such payment.

6.9 Execution of Bond Certificates 6.9.1 All Certificates shall be executed for and on behalf of the State by the Commissioner for Finance (or any

person occupying similar position in relation to the finances of the State for the time being) and the Registrar. The signatures of the Commissioner and the Registrar may be mechanically or electronically reproduced or engraved on the Certificates. If the Commissioner is removed after the execution but before the delivery of such Certificates, such signature shall remain valid and sufficient for all purposes as if the Commissioner had not been removed until such delivery.

6.10 Exchange of Bond Certificates 6.10.1 Upon presentation and surrender of any Certificate to the Registrar together with written instructions

satisfactory to the Registrar, (duly executed by the registered Holder or his attorney duly authorised in writing), the Certificate may be exchanged for an amount equal to the aggregate principal of fully registered Bonds; provided that such surrender and exchange shall occur on the Maturity Dates of the Bonds or any other date in respect of the Bonds as specified herein.

6.11 Negotiability and Transfer of Bonds 6.11.1 a. All Bonds issued pursuant hereto shall be negotiable, subject to the provisions for registration

of transfers thereof contained herein or on the Bond Certificates. b. The Commissioner shall cause the Register, with respect to the Bonds, to be maintained at the

offices of the Registrar therefor and the Registrar shall provide for the registration of any Bonds or its transfer under such reasonable regulations as the Registrar with the approval of the Commissioner and the Trustees may prescribe. The Registrar shall maintain the Register for purposes of exchanging and registering the Bonds in accordance with the provisions hereof.

c. Each Bond issued shall be registered on the Register. Any transfer of Bonds shall be effective only to the extent that such transfer is registered in the Register, by the Holder or transferee thereof in person or by his attorney duly authorised in writing, upon presentation and surrender of the Bond Certificate together with a written instrument of transfer in a form satisfactory to the Registrar and in compliance with the Law duly executed by or on behalf of the registered Holder and the transferee by a duly authorised attorney. Upon surrender of the aforesaid documents to facilitate the registration of transfer of any Bond, the Registrar shall if the above stated conditions are met, register such transfer, and deliver a new Bond Certificate(s) to the transferee as appropriate.



6.12 Non-Presentation of Bond Certificates 6.12.1 a. If any Certificate is not presented for payment when the principal thereof becomes due

(whether at maturity or call for redemption or otherwise), the Issuer’s liability to the Holder thereof for the payment of such Bonds shall be completely discharged if funds sufficient to pay such Bonds and the coupon thereon shall be held by the Trustees for the benefit of such Holder, and thereupon it shall be the duty of the Trustees to hold such funds subject to sub-clause (b) below, without liability for any further coupon thereon, for the benefit of such Holder, who shall thereafter be restricted exclusively to such funds for any claim of whatever nature under this Deed or, on or with respect to, such Bonds.

b. Notwithstanding any provision of this Deed to the contrary, monies held by the Trustees for the payment of principal, premium, (if any), or coupon on the Bonds left unclaimed for six (6) years after the date on which such payment is due shall be disposed of by the Trustees in accordance with the provisions of the ISA or any successor legislation. The Holders of such Bonds shall thereafter be entitled to look only to their remedies under the ISA or successor legislation, and the liabilities of the Issuer and the Trustees with respect to such monies shall abate.

7. REDEMPTION OF BONDS 7.1 The Bonds will be redeemed at their Principal Amount plus accrued but unpaid Coupon on the Maturity

Date. 7.2 The Bondholders will present to the Registrar proper identification/authorisation forms evidencing their

beneficial ownership in the Bonds. Upon the determination and verification of the beneficial ownership, the Issuer will repay the Principal Amount of the Bonds plus Coupon accrued but unpaid from the last Coupon Payment Date. The proceeds of such redemption will be transferred to the account indicated by the Bondholder by the Registrar acting on behalf of the Issuer and the Trustees.

10. INVESTMENT OF MONIES IN THE SINKING FUND 10.1 Monies in the Sinking Fund shall be invested as soon as practicable upon receipt in Permitted

Investments as selected by the Trustees; provided that (i) the maturity date or the date on which such Permitted Investments may be redeemed at the option of the Trustees shall coincide as nearly as practicable with (but shall in no event be later than) the date(s) on which monies in the Sinking Fund from which the said Permitted Investments were made will be required for the purposes thereof, and (ii) the Trustees shall select Permitted Investments in accordance with prudent investment standards.

10.2 Investment of amounts comprised in the Sinking Fund shall be made in the name of the Sinking Fund. 10.3 The return on any Permitted Investment made pursuant to this Clause 10 shall be invested by the

Trustees so as to form a part of the Sinking Fund. 10.4 The Trustees shall not be liable for making any investment authorised by the provisions of this Deed in

the manner provided in this clause or for any loss resulting from any such investment so made, except for its own gross negligence, willful misconduct and /or insider or self-dealing constituting a breach of trust under any applicable law.

11. OBLIGATIONS OF THE GOVERNMENT The Government covenants and agrees that: 11.1 It will ensure that the Pledged Revenues shall be appropriated in accordance with the provisions of the

Law, and promptly cause to be paid into the Sinking Fund, the principal, premium, (if any), coupon, and other payments due in respect of the Bonds issued hereunder at the place, on the dates and in the manner provided herein.

11.2 Without limiting the generality of the granting clauses set forth in Clause 3.2 above and as security for the payment of the principal, coupon, premium, (if any) and other payments due with respect to the Bonds, the Government hereby grants the Trustees as a first charge, a pledge of and lien on the Pledged Revenues. Such pledge shall be valid and binding from the date hereof and all Pledged Revenues shall



immediately be subject to such pledge as and when received by the Government, without any physical delivery thereof or any further act.

11.3 Save for the security interest referred to in Clause 11.2 above, it will not create any pledge, lien or other encumbrance upon, or permit any pledge, lien or other encumbrance to be created on the Pledged Revenues.

11.4 It will direct the AGS to issue on behalf of the State, an ISPO authorising the AGF to deduct from the monthly statutory allocations accruing to the State from the Federation Account, such amounts as are specified by the Trustees as required to be paid into the Sinking Fund, and directing same to be paid into the Sinking Fund for the purpose of further securing the fulfilment of Government’s obligations with respect to principal and or coupon payments on the Bonds.

11.7 It shall pay the Trustees such fees as may be agreed between the Parties, and reimburse the Trustees all reasonable and proper out of pocket costs and expenses as they may incur in connection with the performance of their duties under this Deed including the costs for convening and holding meetings of Holders; provided that, for any additional costs which will cause the costs to exceed, in the aggregate, One Million Naira (N1.0m) in any one year, the Trustees shall seek and obtain the prior written consent of the Commissioner to incur such costs and expenses.

11.9 Shall ensure that for as long as the Bonds remain outstanding, the Appropriation Law shall make provisions for its annual debt service obligations under this Deed as a recurrent expenditure payable from the Consolidated Revenue Fund.

12 POWERS, RIGHTS, DUTIES AND RELIEFS OF THE TRUSTEES 12.1 Subject to the provisions of the Law and this Deed, the Trustees shall enjoy all powers, reliefs, and

indemnities of trustees preserved under the Trustees Act and all other applicable laws for the time being in force.

12.2 The Trustees shall have the power to: 12.2.1 effectively manage the Sinking Fund in accordance with the Law, for the purpose of making

principal and or coupon payments on the Bonds issued hereunder; 12.2.2 enforce any agreement or covenant made to secure the interest of the Holders, and resort to such

remedies as may be appropriate, including instituting or defending proceedings in connection with the management of the Sinking Fund;

12.2.3 do any act in accordance with the Law, the ISA, and any applicable law which shall be for the benefit of the Holders.

12.3 The Trustees shall have the following duties and responsibilities: 12.3.3 To retain control over the Sinking Fund and keep the monies and Assets derived from the

management of the Sinking Fund separate from all other monies and assets within their control, in their ordinary course of business;

12.3.4 To advise the Government when contributions to the Sinking Fund will be sufficient with or without further accumulations of coupon, but without further payments of contributions, to enable the Government to redeem the Bonds at the time of their maturity; and also to inform the Government as to when to recommence contributions into the Sinking Fund;

12.3.5 To summon, as and when necessary, meetings of all Holders of the Bonds whereat a Statement of Affairs on the management of the Sinking Fund shall be presented, and/or any other necessary business and/or matter shall be presented and determined. A meeting shall be convened by the giving of at least 28 (twenty eight) clear days written notice to all Holders (specifying the agenda at the meeting), and the said notice shall also be published in at least two (2) national newspapers. The procedure and regulations at such a meeting of the Holders shall be in accordance with Schedule 2 of this Deed.

12.4 It is hereby expressly agreed and declared as follows: 12.4.1 The Trustees, acting reasonably and in good faith, may in relation to this Deed, act on the opinion

or advice of, or any information from any solicitor, valuer, surveyor, broker, auctioneer, accountant, or other expert, whether obtained by the State or by the Trustees, and shall not be responsible for any loss occasioned by their reliance on such opinion, advice or information; and



any such advice, opinion or information may be obtained or sent by letter, facsimile or electronic mail;

12.4.5 Without prejudice to the right of indemnity conferred by law on trustees, the Trustees and every attorney, manager, agent or other person appointed by them hereunder shall be entitled to be indemnified by the Issuer in respect of all liabilities and expenses incurred by them in the execution of the powers and trusts hereof or of any powers, authorities or discretions vested in them pursuant to these presents provided that the Trustees have not been grossly negligent or have acted in default of their powers;

12.4.7 The Trustees shall not be liable for any act pursuant to or under this Deed, save only for any breach of trust committed by them, provided that nothing contained in this clause shall exempt the Trustees from or indemnify them against any liability for breach of trust where the Trustees fail to show the degree of care and diligence required of them, having regard to the provisions hereof conferring on them any powers, authorities or discretions;

12.4.8 Subject to Clause 11.7 above, the Trustees may employ and pay an agent, whether a solicitor or other person, to transact or concur in doing all acts required to be done by the Trustees, including the receipt and payment of money, and any such person shall be entitled to charge and be paid all usual professional fees and other charges;

12.4.9 In the absence of bad faith and gross negligence on the part of the Trustees, the Trustees may conclusively rely upon and shall be protected in acting or refraining from acting upon any document, including but not limited to any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order or other paper or document reasonably believed by them to be genuine and to have been signed or presented by proper officials of the Issuer relating to any matter primarily within the knowledge of the Issuer, the Holders or agents or attorneys of the Holders, as sufficient evidence thereof; provided that in the case of any such document specifically required to be furnished to the Trustees hereby, the Trustees shall be under a duty to examine the same to determine whether it conforms to the requirements thereof. The Trustees shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, or other paper or document submitted to the Trustees; provided however that the Trustees, in their discretion, may make such further inquiry or investigation into such facts or matters as they may deem prudent;

12.4.11 Subject to Clause 13.2, the Trustees shall be entitled to assume without enquiry, in the absence of knowledge by or express notice to them to the contrary, that the Issuer is duly performing and observing all the covenants and provisions herein contained which are to be performed and observed by the Issuer and it shall be in the discretion of the Trustees whether to take any action or proceedings or to enforce the performance thereof, and the Trustees shall not be bound and the Trustees shall not be bound to declare the Bonds immediately repayable or to take any steps to enforce payment thereof or any of the provisions of this Deed unless and until in any of such cases the Trustees are required to do so in writing by the registered Holders of at least three quarters (¾) of the nominal value of the Bonds or by a Special Resolution passed at a duly convened meeting of Holders; Provided that the Trustees shall in any case inform the Holders of the happening of any Event of Default that comes to their knowledge;

12.4.12 The Trustees in the exercise of the powers and discretions vested in them pursuant to this Deed shall comply with the provisions of the ISA and any other applicable law.

13 EVENTS OF DEFAULT Each of the following events is hereby declared an “Event of Default” with respect to the Bonds, and

subject to the provisions of this Deed, the principal and coupon payments due to the Holders shall become immediately payable and the Trustees shall be entitled to take all necessary steps to effect such payment:

13.1 If payment by the Issuer in respect of any coupon or premium on any Bond shall not be made in full when same becomes due and payable;

13.2 If payment by the Issuer in respect of the principal of the Bonds shall not be made in full when the same becomes due and payable, whether at maturity or by proceedings for redemption or otherwise;



13.3 If the Issuer shall fail to observe or perform any other obligation, covenant or agreement on its part as prescribed herein, for a period of 90 days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Issuer by the Trustees, or from which such notice has been given to the Issuer and the Trustees by Holders of at least 50% in aggregate of the principal amount of the Bonds still then outstanding; provided however, that if the breach of covenant or agreement is one which cannot be completely remedied within the 90 days after written notice has been given, it shall not be an Event of Default with respect to the Bonds as long as the Issuer has taken active steps within 90 days after written notice has been given to remedy the failure and is to the satisfaction of the Trustees diligently pursuing such remedy;

13.4 In the event of a Material Adverse Change; 13.5 If by reason of the introduction of, or any change in, any applicable law or regulation or regulatory

requirement, or any change in the interpretation or application thereof, otherwise than by the act of the State, it becomes unlawful or it is prohibited, for the Issuer to maintain or give effect to any of its material obligations as contemplated by this Deed.

14 NO ACCELERATION OR CROSS DEFAULTS 14.1 There shall be no rights of acceleration with respect to the Bonds. Subject to Clause 13, an Event of

Default with respect to any other Bonds issued by the Issuer shall not cause an Event of Default with respect to the Bonds issued pursuant hereto unless such event or condition on its own also constitutes an Event of Default with respect to the Bonds pursuant to Clause13 hereof.

15 REMEDIES AND ENFORCEMENT OF REMEDIES 15.1 Upon the occurrence of the Event of Default specified in Clause 13.1 and 13.2, subject to the terms

hereof, the Trustees shall within six (6) months of such default take immediate steps to ensure that the AGF deducts from the statutory allocation of the State such amounts as are specified by the Trustees as required to be paid into the Sinking Fund for the purpose of redeeming any outstanding obligations hereunder.

15.2 Subject to the provisions of Clause 13 hereof, upon the occurrence and continuance of any of the Events of Default specified in Clauses 13.3 and 13.4, the Trustees may, or shall upon the written request of Holders of not less than 10% of the principal amount of the Bonds, together with the due indemnification of the Trustees to their satisfaction, proceed forthwith to protect and enforce their rights and the rights of the Holders hereunder, under the ISA and under the Law and the Bonds by such suits, actions or proceedings, as the Trustees, being advised by counsel, shall deem expedient.

15.3 The Trustees shall also file a notice of any default and remedies being pursued with the SEC within fifteen (15) days of the occurrence of the Event of Default.

15.4 No Holder shall in any circumstance be entitled to any remedy (whether by way of action, petition, arbitration or otherwise howsoever) for the recovery of any payment of principal or coupon on the Bonds unless the Trustees, having become bound to take proceedings in accordance with this Deed, notify the Holders in writing of their refusal to do so, in which case the Holder may:

15.4.1 take such proceeding in a representative capacity on behalf of himself and, where authorised, other Holders of not less than 10% of the principal amount of the Bonds, for the recovery of the payments due on the Bonds; or

15.4.2 take such proceedings in his name for the recovery only of his own portion of the Bonds. 18. REMOVAL AND RESIGNATION OF TRUSTEES 18.1 Any Trustee may resign as trustee at any time, by giving not less than sixty (60) days prior written notice

to that effect to the Commissioner, the SEC and the Holders, and such resignation shall not be effective until a successor(s) to the Trustee is appointed in accordance with the Law and this Deed; provided that the Trustee shall continue to hold the rights conferred and perform the obligations imposed on it by this Deed until it has effectively resigned as Trustee.

18.2 In addition, where any other agreement subsisting between a Trustee and the Government so provides, the Trustee may be removed by the Government but only for the reasons stated in the agreement as



aforesaid and only so long as (a) no Event of Default shall have occurred and be continuing and (b) the removal of the Trustee shall not have any adverse effect upon the rights and interests of the Holders.

18.3 Where a Trustee gives notice of its resignation as trustee pursuant to Clause 18.1 hereof or in the event that a Trustee is dissolved or otherwise becomes incapable to act as Trustee or is removed as Trustee pursuant to Clause 18.2 herein, the Commissioner upon the approval of the Executive Council shall immediately appoint a successor Trustee and the SEC shall be promptly notified. In such event, the successor Trustee shall cause notice of its appointment to be issued to the Holders of all Bonds then outstanding. If the Trustee resigns, the resigning Trustee shall bear the costs of giving such notice. If the Trustee is removed, is dissolved, or otherwise becomes incapable of acting as trustee, the Government shall bear the costs of giving such notice.

18.4 Any successor Trustee appointed by the Commissioner shall be a company authorised to carry on trust business in Nigeria and duly registered with the SEC to provide corporate trust services.

18.5 Every successor Trustee shall execute, acknowledge and deliver to its predecessor and also to the Government an instrument in writing, accepting such appointment hereunder, and thereupon such successor Trustee, without further action, shall become fully vested with all the rights, immunities, powers, trusts, duties and obligations of its predecessor, and such predecessor shall execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of such predecessor. The predecessor Trustee shall execute any and all documents necessary or appropriate to convey all interest it may have to the successor Trustee. The predecessor Trustee shall promptly deliver all records relating to the trust and copies thereof and communicate all material information it may have obtained concerning the trust to the successor Trustee and shall duly provide the successor Trustee with a full and updated statement of affairs and accounts of the trust in respect of each Series of Bonds.

22. DURATION AND TERMINATION 22.1 Subject to Clause 22.2, the term of this Deed shall be seven (7) years, or until the obligations secured

by the Sinking Fund are fully discharged (whichever is the later), commencing on the date first above written. The term hereby created may be renewed or extended on such terms as may be mutually agreed by the Parties.

22.2 Regardless of the term specified in Clause 22. 1, this Deed may be terminated where: 22.2.1 there is a material breach by the Government of its obligations under this Deed and a Trustee has

given the Government three (3) months’ notice in writing of its intention to terminate this Deed; 22.2.2 the appointment of a Trustee is terminated in accordance with the provisions of this Deed; 22.2.3 in the considered opinion of the Commissioner, any of the circumstances specified under Clause 19.1

herein makes the fulfilment of a Trustee’s obligations under this Deed impracticable; 22.2.4 the Commissioner receives a Special Resolution passed by Holders of the Bonds requesting that the

appointment of a Trustee be determined; or 22.2.5 an effective resolution is passed, or a binding court order is made for the winding up of a Trustee. 22.3 In the event of a termination of this Deed, the Trustees shall immediately account for and deliver up all

of the Assets and sums in the Sinking Fund to its/their appointed successor or successors. A Trustee shall continue in office until a successor has or successors have been duly appointed to take over its obligations herein.

SCHEDULE PROVISIONS FOR MEETINGS OF THE HOLDERS

1. Who May Convene Meetings 1.1 The Issuer or the Trustees respectively may at any time at their discretion and the Trustees shall on the

requisition in writing of the Holders holding not less than three-quarters (¾) of the nominal amount of the Bonds for the time being outstanding and upon being indemnified to its satisfaction against all costs and expenses to be thereby incurred, convene a meeting or meetings of the Holders in accordance with the provisions of this schedule to discuss and determine any matter affecting their interest. Any such meeting shall be held at such place as the Trustees shall determine or approve.



1.2 Upon the occurrence of an Event of Default, Holders of at least 10% of the nominal amount of the Bonds for the time being outstanding shall be entitled to convene a meeting at which a resolution to compel the Trustees to take steps against the Issuer will be passed.

2. Notice of Meetings 2.1 A meeting of the Holders may be called by giving not less than twenty-eight (28) days’ notice in writing. 2.2 A meeting may be called after giving shorter notice than that specified in paragraph 2.1 above if consent

is accorded thereto by Holders holding not less than seventy-five per cent (75%) of the nominal amount of the Bonds for the time being outstanding.

3. Content and Manner of Service of Notice 3.1 Every notice of a meeting shall specify the place, the day and hour of the meeting and shall contain a

statement of the business to be transacted and the terms of every resolution to be proposed thereat. 3.2 Notice of every meeting shall be given to:

3.2.1 every Holder; 3.2.2 the person entitled to any Bonds in consequence of the death, insolvency, winding-up or dissolution

of a Holder by sending it through the post in a pre-paid letter addressed to him by name or by the title of the representative of the deceased or assignee of the insolvent or by any like description at the address (if any) supplied for the purpose by the person claiming to be so entitled, or until such an address has been so supplied by giving the notice in any manner in which it might have been given if the death, insolvency, winding-up or dissolution had not occurred;

3.2.3 to the Registrar; 3.2.4 to the Trustees when the meeting is convened by the Issuer; and 3.2.5 the Commissioner.

3.3 The accidental omission to give notice to or the non-receipt of notice by any Holder or other person to whom it should be given shall not invalidate the proceedings of the meeting.

4. Quorum for Meeting 4.1 Any two or more persons holding or representing by proxy at least one-quarter (¼) of the nominal

amount of the Bonds for the time being outstanding shall be a quorum for the conduct of business at a meeting of the Holders unless the business of the meeting includes the consideration of a Special Resolution, in which event the necessary quorum shall be two (2) or more persons holding or representing by proxy a simple majority of the nominal amount of the Bonds for the time being outstanding and no business shall be transacted at any meeting unless the requisite quorum shall be present when the meeting proceeds to business.

4.2 If within an hour from the time appointed for holding the meeting a quorum is not present, the meeting, if called upon the requisition of Holders, shall stand dissolved. In any other case the meeting shall stand adjourned to such day and time not being less than seven (7) days thereafter and to such place as the Chairman may determine.

5. Chairman of Meeting 5.1 The Trustees or such other person nominated by the Trustees shall be entitled to take the chair at every

meeting and if no such nomination is made or if at any meeting the Trustees or the person nominated shall not be present within thirty (30) minutes after the time appointed for holding the meeting the Holders personally present shall on a show of hands elect one of themselves to be the Chairman thereof.

6. Persons Entitled to Attend Meetings 6.1 In addition to the Holders, the Trustees, their solicitors, the Commissioner and any authorised officer of

the Government and any other person authorised in that behalf by the Trustees may attend any meeting but shall not be entitled to vote thereat.



7. Evidence of Passing of Resolution 7.1 At any meeting a resolution or any question put to the vote of the meeting shall be decided on a show of

hands unless a poll is demanded in the manner hereinafter mentioned, and unless a poll is so demanded a declaration by the Chairman that on a show of hands the resolution has been carried either unanimously or by a particular majority or lost and an entry to that effect in the books containing the minutes of the proceedings of the meeting, shall be conclusive evidence of that fact without proof of the number or proportion of the votes cast in favour of, or against such resolution.

8. Demand for Poll 8.1 Before or on the declaration of the result of the voting on any point or question on a show of hands, a

poll may be ordered to be taken by the Chairman of the meeting on his own motion, and shall be ordered to be taken by him on demand made in that behalf by at least five (5) Holders having the right to vote on the resolution and present in person or by proxy or by the holders of not less than one-quarter (¼) in nominal amount of the Bonds for the time being outstanding.

8.2 The demand for a poll may be withdrawn at any time prior to such poll being taken by any person or persons who made the demand.

9. Time of taking Poll 9.1 A poll demanded on a question of adjournment shall be taken forthwith. 9.2 A poll demanded on any other question (not being a question relating to the election of a Chairman as

provided for in Paragraph 5.2 hereof) shall be taken in such manner and at such time not being later than thirty (30) days from the time when the demand was made, as the Chairman may direct.

10. Votes

On a show of hands, every Holder who (being an individual) is present in person or by proxy or (being a body corporate) is present by its duly authorised representative shall have one (1) vote, and on a poll every Holder who is present in person or by proxy shall have one (1) vote in respect of every unit of the Debt Security of which he is the holder.

13. Entitlement of Holder to vote differently

On a poll taken at a meeting of the Holders, a Holder entitled to more than one vote, or his proxy or other person entitled to vote for him as the case may be, need not, if he votes, use all his votes or cast all his votes in the same way.

14. Scrutineers at Poll 14.1 Where a poll is to be taken the Chairman of the meeting shall appoint two (2) scrutineers to scrutinise

the votes given on the poll and to report thereon to him. 14.3 Of the two (2) scrutineers appointed under this clause at least one such scrutineer shall always be a

Holder present at the meeting, provided that such a Holder is available and willing to be appointed. 16. Voting in the case of joint holding 16.1 In the case of joint Holders the vote of the senior who tenders a vote whether in person or by proxy shall

be accepted to the exclusion of the votes of other joint Holders; and for this purpose seniority shall be determined by the order in which the names stand in the Register of Bonds.

17. Power to adjourn meeting 17.1 The Chairman of a meeting of the Holders (may with the consent of and shall, if directed by any such

meeting at which a quorum is present), adjourn the same from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than business which might lawfully have been transacted at the meeting from which the adjournment took place.



18. Casting Vote 18.1 In the case of equality of votes whether on a show of hands or a poll, the Chairman of the meeting at

which the show of hands takes place or at which the poll is demanded shall be entitled to a second or casting vote in addition to the votes to which he may be entitled as or on behalf of a Holder.

22. Resolution Binding

A resolution passed at a meeting of the Holders duly convened and held in accordance with this Deed shall be binding upon all the Holders whether present or not present at such meeting, and each of the Holders shall be bound to give effect thereto accordingly, and the passing of any such resolution shall be conclusive evidence that the circumstances justify the passing thereof, the intention being that it shall rest with the meeting to determine without appeal, whether or not the circumstances justify the passing of such resolution.

23. Minutes

Minutes of all resolutions and proceedings at such meeting as aforesaid shall be made and duly entered in the books to be provided from time to time for that purpose by the Trustee sat the expense of the Issuer, and every such minutes as aforesaid if signed by the Chairman of the meeting at which such resolutions were passed or proceedings had or by the Chairman of the next succeeding meeting of the Holders shall be conclusive evidence of the matters therein contained, and until the contrary is proved every such meeting or proceedings in respect of which minutes have been signed as aforesaid shall be deemed to have been duly held and convened, and all resolutions passed thereat or proceedings taken to have been duly passed and taken.

24. Resolution in Writing

A resolution in writing duly signed by all the Holders for the time being outstanding, shall be as effective for all purposes as a Special Resolution duly passed at a meeting of the Holders. Such resolution may be contained in one document or in several documents of identical form duly signed by or on behalf of all of the Holders.

Consents The under listed parties have given and not withdrawn their written consents to the issue of this Prospectus with their names and reports (where applicable) included in the form and context in which they appear: Representatives of the State Executive Council: His Excellency, Chief Timipre Sylva

Hon. Gideon Ekeuwei Mr. Obegha Julius OworiboDr. Silva Opuala-Charles Dr. Azipabu Godbless Eruani Mrs. Josephine Ezonbodor Engr. Emmanuel Frank-Opigo Hon. Maxwell Oko Hon. Francis Kuroghoekegha Mrs. Victoria P. Denenu Chief Diekivie B. Ikiogha Hon. Waripam-owei Dudafa Mr. Ibomo Kenigua Robert Chief Whisky E. Ayakeme Chief Asara A. Asara Elder Bethel Amabebe Hon. Bekeakpo Etifa Ms. Dora Oru Ebapregha Hon. John D. Iyekoroghe Chief Benneth Owei-Zala Mr. Stephen Ogullah



Mr. Kesiye Frank-Oputu Solicitor to the State Government Mr. Anthony George Ikoli (SAN) Auditor-General to the State Government: Mr. A. A. Assayomo Esq. Accountant-General to the State Government: Mr. Francis Okokuro Lead Issuing House/Lead Underwriter: FBN Capital Limited Joint Issuing Houses: BGL Plc

Capital Assets Limited Skye Financial Services Limited Stanbic IBTC Bank PLC Sterling Capital Markets Limited UBA Capital Limited Vetiva Capital Management Limited

Underwriters: BGL Plc Capital Assets Limited Skye Bank Plc Stanbic IBTC Bank PLC Sterling Bank Plc United Bank for Africa Plc Vetiva Capital Management Limited

Trustees: First Trustees Nigeria Limited Skye Trustees Limited UBA Trustees Limited

Joint Solicitors to the Offer: Banwo & Ighodalo G.Elias & Co.

Solicitors to the Trustees: George-Ikoli & Okagbue Reporting Accountant: Akintola Williams Deloitte Lead Stockbroker: FBN Securities Limited Joint Stockbroker: BGL Securities Limited

Lead Stockbrokers Limited MACT Securities Limited S. A. Capital & Asset Management Limited Strategy & Arbitrage Limited UBA Stockbrokers Limited Vetiva Securities Limited

Registrars: First Registrars Nigeria Limited Receiving Banks/Paying Agent: First Bank of Nigeria Plc

Skye Bank Plc United Bank for Africa Plc



DOCUMENTS AVAILABLE FOR INSPECTION

The following documents will be available for inspection throughout the life of the Bond at the principal offices of the Issuing Houses and from the State Ministry of Finance, Yenogoa, Bayelsa State.

• The Bayelsa State Bonds and Securities Law, 2009;

• The Resolution passed by the Bayelsa State House of Assembly pursuant to the Enabling Law, authorizing the monthly deduction of N1,241,107,428.57 from the Statutory Allocation by the Accountant General of the Federation for debt service throughout the tenor of the Bond as published in the Official Gazette of the State;

• The Resolution of the Bayelsa State Executive Council authorizing the Bond Issue, published in the Official Gazette of the State;

• The Letter of Approval dated May 5, 2010, in respect of the ISPO issued by the Honourable Minister for Finance;

• Presidential Tax waiver on all categories of Bonds, Short Term Federal Government Securities and Reduction in Stamp Duties published in the Guardian Newspaper of March 29, 2010;

• A Vending Agreement dated June 28, 2010 between the Bayelsa State Government on the one part and the Issuing Houses on the other part;

• An Underwriting Agreement dated June 28, 2010 between the Bayelsa State Government on the one part and the underwriters on the other part;

• The Trust Deed dated June 28, 2010 between Bayelsa State Government on the one part and First Trustees Nigeria Limited, Skye Trustees Limited and UBA Trustees Limited on the other part;

• The audited financial statements of Bayelsa State for each of the five years ended 31st December 2004, 2005, 2006, 2008 and half year to 30th June 2009;

• The report of Akintola Williams Deloitte on the State’s Revenue and Expenditure Statements for the five years ended December 31, 2008, half year to 30th June 2009 and Revenue and Expenditure Forecast for seven years ending December 2017;

• The Feasibility Reports commissioned by the State in connection with the projects to be funded by the proceeds of the Issue;

• The Schedule of Claims & Litigations involving the State, together with the opinion of (Joint Solicitors to the Issue) prepared in connection therewith;

• The Prospectus dated June 28, 2010 issued in respect of the N50,000,000,000 Bayelsa State 13.75% Fixed Rate 7year Bond Issue 2010/2017;

• The written consents indicated above;

• The Letter from SEC confirming the registration of the Bond Issue;

• The Rating Report issued by Agusto & Co Limited for the Bond Issue. • A N50,000,000,000 loan facility from First Bank of Nigeria Plc to the Bayelsa State Government to

refinance its existing facilities with other banks namely Oceanic Bank, ETB, Intercontinental Bank and Bank PHB.


PROCEDURE FOR APPLICATION AND ALLOTMENT 1. Application The general investing public is hereby invited to apply for the Bonds through any of the Receiving Agents listed in this Prospectus. 1.1 Application for the Bonds now being offered must be made in accordance with the instructions set

out on the back of the Application Form. Care must be taken to follow these instructions, as applications which do not comply will be rejected.

1.2 The Application List for the Bonds now being offered opens on June 30, 2010 and will close June 30, 2010. Applications must be for a minimum of 1000 registered Bonds of N1,000.00 each, representing an aggregate value of N1,000,000.00 and in integral multiples of 100 registered Bonds thereafter, representing an aggregate value of N100,000 each. The number of registered Bonds for which application is made and the value of the cheque or bank draft attached should be entered in the space provided in the attached Application Form.

1.3 The subscription currency for the Issue is the Nigerian Naira (N). Foreign currency subscriptions will be processed at the applicable foreign exchange rate determined at the auction of the CBN as conducted from time to time.

1.4 The applicant should make only one application, whether in his own name or in the name of a nominee. Multiple or suspected multiple applications will be rejected.

1.5 Applicants should complete the Application Form as appropriate. A corporate applicant should affix its seal in the box provided for this purpose and state its incorporation (RC) Number or in the case of a corporate foreign subscriber, it’s appropriate identification number in the jurisdiction in which it is constituted.

1.6 All applicants are required to indicate their bank account details in the space provided on the Application Form for the purposes of Coupon and Principal e-payments.

1.7 Each duly completed Application should be forwarded ONLY to one of the Receiving Agents listed in this Prospectus, together with the cheque or bank draft for the aggregate value of Bonds being subscribed, crossed “BAYELSA STATE GOVERNMENT BONDS 2010/2017” and made payable to the Receiving Agent to which the application is addressed. All bank commissions and transfer charges must be prepaid by the applicant. All cheques and bank drafts will be presented upon receipt and all applications in respect of which cheques or bank drafts are returned unpaid will be rejected.

2. Allotment The State Executive Council and the Issuing Houses reserve the right to accept or reject any application in whole or in part for not complying with the terms and conditions of the Issue. All irregular or suspected multiple applications will be rejected. The allotment proposal will be subject to the clearance of the Commission. Certificates in respect of allotted Bonds will be sent by registered post not later than 15 (fifteen) Business Days from the Allotment Date. Any investor who prefers the issue of the Bonds in dematerialised form should specify the details of his/her stockbroking firm, CHN and CSCS account in the space provided on the Application Form. 3. Application Monies All application monies will be retained in separate interest-yielding bank accounts with the Receiving Banks pending allotment. If any application is not accepted, or is accepted for fewer Bonds than the number applied for, a crossed cheque for the full amount or the balance of the amount paid (as the case may be) plus interest will be returned by registered post within 5 (five) Business Days of allotment by the Registrar. Where monies are not sent within the stipulated 5 Business Days, accrued interest will be paid to the affected applicants at the prevailing Monetary Policy Rate plus a margin of 5% i.e. MPR +5%.


RECEIVING AGENT The Prospectuses incorporating Application Forms may be obtained free of charge from any of the following SEC-registered Receiving Agents, to whom brokerage commission of 0.75% will be paid on the value of Bonds allotted in respect of applications bearing their official stamps. The Issuing Houses cannot accept responsibility for the conduct of any of the institutions listed below. Investors are therefore advised to conduct their own independent enquiries before choosing an agent to act on their behalf. Evidence of lodgment of funds at any of the Receiving Agents listed below, in the absence of corresponding evidence of receipt by the Issuing Houses, cannot give rise to a liability on the part of the Issuing Houses under any circumstances.

Access Bank Plc Afribank Nigeria Plc Diamond Bank Plc EcoBank Nigeria Plc Equitorial Trust Bank Plc Fidelity Bank Plc First Bank of Nigeria Plc First City Monument Bank Plc First Inland Bank Plc Guaranty Trust Bank Plc Intercontinental Bank Plc Oceanic Bank International Plc

PlatinumHabib Bank Plc Nigerian International Bank Limited Skye Bank Plc Spring Bank Plc Sterling Bank Plc Stanbic IBTC Bank Plc Standard Chartered Bank Plc United Bank of Africa Plc Union Bank of Nigeria Plc Unity Bank Plc Wema Bank Plc Zenith Bank Plc

Adamawa Securities Ltd Adonai Stockbrokers Ltd AIL Securities Ltd Alangrange Securities Ltd Allbond Investments Ltd Alltrade Securities Ltd Alliance Capital Management Ltd AMYN Investments Ltd Asset & Resource Management Ltd

Anchoria Investment & Securities Ltd Apex Securities Ltd APT Securities & Fund Ltd Aquila Capital Limited Bacad Finance & Investment Co Ltd Beaver Securities Ltd Bestworth Assets & Trust Ltd BFCL Assets & Investment Ltd BGL Securities Ltd BIC Securities Ltd BSD Securities Ltd Capital Assets Ltd Capital Trust Brokers Capital Express Securities Ltd Century Securities Ltd Calyx Securities Ltd Camry Securities Limited Cash Craft Asset Management Ltd. Capital Bancorp Ltd Cashville Investments & Securities Ltd. Centre-Point Investment Ltd City Investment Management Ltd City Securities Ltd City-Code Trust & Investments Ltd Consolidated Investment Ltd Cooper Flemming Stockbrokers Ltd Core Trust & Investment Ltd Crane Securities Ltd Crossworld Securities Ltd Clearview Investment Co Ltd Counters Trust Securities Ltd CSL Stockbrokers Ltd DakaL Securities Ltd DBSL Securities Ltd De-canon Investments Ltd

De-Lords Securities Ltd Denham Management Ltd Dependable Securities Ltd Dominion Trust Ltd Dynamic Portfolios Ltd Emerging Capital Ltd Empire Securities Ltd Euro Comm Securities Ltd Express Portfolio Services Ltd ESL Asset Management Limited Falcon Securities Ltd FBN Securities Limited F & C Securities Ltd Fidelity Union Securities Ltd Fidelity Finance Ltd Financial Derivatives Ltd Financial Equities Ltd Financial Trust Co Ltd Finmal Finance Company Ltd First Equity Securities Ltd First Stockbrokers Ltd Folu Securities Ltd Foresight Securities & Investment Ltd Forte Asset Management Ltd Forthright Securities & Investments Ltd Fountain Securities Ltd Future View Financial Services Ltd Genesis Securities Ltd. Gidauniya Investment & Securities Ltd Global Capital Market Ltd Golden Securities Ltd Great Africa Trust Ltd Greenwich Trust Ltd GTI Capital Ltd Hedge Securities & Investments Ltd Heritage Investment & Securities Ltd Horizon Stockbrokers Ltd IBTC Asset Management Ltd IBN Securities Ltd ICON Stockbroker Ltd IMB Morgan Plc Indemnity Finance Ltd Independent Securities Ltd Integrated Trust & Investments Ltd Intercontinental Securities Ltd

International Capital Securities Ltd International Standard Securities Ltd Intercontinental Capital Markets Ltd Interstate Securities Ltd Investors & Trust Co Ltd Jamkol Investments Ltd Jenkins Investment Ltd Kinley Securities Ltd Kundila Finance Services Ltd LB Securities Ltd Lead Securities & Investment Ltd Lighthouse Asset Management Ltd Lion Stockbrokers Ltd Lynac Securities Ltd Magnartis Fin & Inv Ltd Mainland Trust Ltd Maninvest Securities Ltd Marina Securities Ltd Marriot Securities Limited MBC Securities Ltd Mega Equities Ltd Mercov Securities Ltd Molten Trust Ltd Mutual Alliance Investment & Securities Ltd Midas Stockbrokers Ltd Midlands Investment & Trust Co. Ltd Mission Securities Ltd Morgan Trust & Asset Management Ltd Mountain Investment & Securities Ltd Newdevco Finance Securities Ltd Niche Securities Ltd Nigerian Stockbrokers Ltd Networth Securities & Finance Ltd Nova Finance & Securities Ltd Options Securities Ltd OMF Securities & Finance Ltd Partnership Investment Co. Ltd Pine Fields Investment Services Ltd PIPC Securities Ltd Peak Securities Ltd Perfection Securities & Investment Ltd PIPC Securities Ltd Platinum Capital Ltd

Professional Stockbroker Ltd Profund Securities Ltd Prominent Securities Ltd PSL Limited P.S.I. Securities Ltd Rainbow Securities & Investment Co. Ltd Riverside Trust Limited Reward Investments & Services Ltd Rowet Capital Management Ltd Royal Crest Finance Ltd Sanbros Trust & Securities Ltd Securities Solutions Ltd Security Swaps Ltd Shallom Investment & Securities Ltd Sigma Securities Ltd Silver Financial Services Ltd Solid-Rock Securities & Investment Ltd Stanbic Equities Nigeria Ltd Summa Guaranty & Trust Co. Ltd Summit Finance Company Ltd Support Services Ltd Thomas Kingsley Securities Ltd Tiddo Universal Securities & Finance Ltd Tomil Trusts Ltd Topmost Finance & Investment s Ltd TRW Stockbrokers Ltd Transglobe Investment & Finance Co Ltd Trade Link Finance & Securities Ltd Tropics Securities Ltd Trust and Financial Services Ltd Trusthouse Investment Ltd Trust Yields Securities Ltd UBA Securities Ltd UNEX Securities & Investment Ltd Union Stockbrokers Ltd Valmon Securities Ltd Valueline Securities & Investment Ltd Vetiva Capital Management Ltd Vision Trust & Investments Ltd WSTC Financial Services Ltd Yobe Investment Co. Ltd Zenith Securities Ltd Zuma Securities Ltd


APPLICATION FORM

Application list OpensJune 30, 2010

Application list ClosesJune 30, 2010

LEAD ISSUING HOUSE

RC: 286096CA PITA L ASSETS

JOINT ISSUING HOUSES

RC: 223042

RC: 444999

RC. 672560

Sterling CapitalRC 499243

RC: 125097A member of Standard Bank Group

50,000,000,000 Fixed Rate Bond Due 2017at 1,000 per unitN

Payable in Full on Application

BAYELSA STATE GOVERNMENT OF NIGERIAOffer for Subscription

Of

Amount payableN1Million100,000N

GUIDE TO APPLICATIONNumber of units applied for1000 MinimumSubsequent multiples of 100


INSTRUCTIONS FOR COMPLETING THE APPLICATON FORM 1. Applications should be made on the Application Form. Applications made on photocopies of the

Application Form will not be accepted. 2. Applications must not be for less than the minimum number of Bonds stated on the Application

Form. Applications for more than the minimum number of Bonds must be in the multiples stated on the Application Form. The number of Bonds for which an application is made and the amount of the cheque or bank draft attached should be entered in the boxes provided.

3. The Application Form when completed should be lodged with any of the Receiving Agents listed on

page 93. Applications must be accompanied by a cheque or bank draft made payable to the receiving agent to whom, the application is submitted, for the full amount payable on application. The cheque or draft must be drawn on a bank and crossed “BAYELSA STATE GOVERNMENT BONDS 2010/2017”. All bank commissions and transfer charges must be prepaid by the applicant. All cheques and drafts will be presented upon receipt and all applications in respect of which cheques are returned unpaid will be rejected.

4. The applicant should make only one application, whether in his own name or in the name of a

nominee. Multiple or suspected multiple applications will be rejected. 5. Applications from corporate bodies must bear the corporate body’s seal and be completed under the

hand of a duly authorised official. 6. Applications from a Pension or Provident Fund must be in the name of each individual trustee unless

the trustee is a limited liability company. 7. The applicant should not print his signature. If he is unable to sign in the normal manner he should

be treated for the purpose of this Offer as an illiterate and his right thumb print should be clearly impressed on the Application Form.

Application Form

BAYELSA STATE GOVERNMENT BOND 2010/2017
