According to the Minority spokesperson on Finance, Cassiel Ato Forson, government spent GHc87 million on administrative expenses, as well as GHc400, 000 on the printing of material for the energy bond roadshow.

His latest comment follows a press conference the Minority held on Wednesday where they alleged among others that the bond issue was a failure.

[contextly_sidebar id=”j1jr1xCyglAy9VtEEq4GhxedHsAfzNTL”]They also at the press conference accused the Akufo-Addo government of causing financial loss to the state, and requested that the Finance Minister Ken Ofori-Atta be hauled before Parliament.

Speaking with the press in Parliament today [Thursday], Ato Forson, who is also the Member of Parliament for the Ajumako-Enyan-Essiam constituency, said the expenditure amounts to reckless spending.

“From the cost that I have that the taxpayer is paying; the state is paying the arrangers, the banks, GHc87.5 million. The state is paying legal fees of GHc700, 000; the state is paying the accountant, GHc350, 000. Surprisingly, the state is paying administrative expenses of GHc80 million. Overall the state is paying GHc177 million. I think this amount is way too much.”

Mr. Ato Forson argued that, when the $1 billion Eurobond was issued under John Mahama’s administration, the amount spent was way lower than what the current administration is spending.

“This is not the first time the state is raising a bond. The last bond we raised under the Eurobond of $1 billion which translates to about GHc4.4 billion, the total cost was under 0.2 percent. Today, we are seeing a bond that we are raising for about 4 billion and the cost is about 1.77 percent.

He further said the Minister of Finance will be hauled before Parliament to give the actual breakdown of expenses for the energy bond since they suspect wrongdoing.

“I think it is important that we ask questions. So the question we are asking is that we want the Ministry of Finance to provide the state with further and better particulars. We are asking for full breakdown of what constituted the administrative expenses. Printing of the road show material was GHc400, 000. We are going to haul the Minister before Parliament, to give us full breakdown to account for every cedi that has been spent so far. We think it is way too much and we smell something fishy,” he added.

Background

Government issued a ten year and seven year bond with the aim of getting GHc6 billion to offset the legacy debts of the energy sector which was about GHc10 billion, but in all, a total of GHc4.69 billion was realized even after a seven day extension period.

The 7-year component raked in 2.4 billion cedis as targeted, at an interest rate of 19 percent.

However, the 10-year bond failed to hit the 3.6 billion cedis mark.

The Minority at a press conference on Wednesday made a litany of accusations against government, saying several wise counsel was ignored.

They also accused government of breaching the constitution because they did not seek the approval of Parliament before issuing the bond.

Minority presser on energy bond unnecessary, misleading – Kwaku Kwarteng

But a Deputy Minister of Finance, Kwaku Kwarteng, whilst speaking on the Citi Breakfast Show on Thursday, said the press conference organised by the Minority was unnecessary.

“We think that this press conference was completely unnecessary, bad taste and misinformed,” he added.

Energy bond struggled due to low interest rate – Finance Ministry

He however clarified that, government’s failure to achieve its targeted GHc10 billion lump sum after issuing the bond, was largely because investors considered the interest rate unfavourable.

Mr. Kwaku Kwarteng noted that investors were not happy with the 19% promised them, and had asked for more, but government was not willing to offer anything beyond 20%.

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By: Godwin Akweiteh Allotey & Duke Mensah Opoku/citifmonline.com/Ghana
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A Deputy Minister of Finance, Kwaku Kwarteng, made this known today [Thursday] on the Citi Breakfast Show.

He noted that investors were not happy with the 19% promised them, and had asked for more, but government was not willing to offer anything beyond 20%.

[contextly_sidebar id=”y0TZ7nHhOBcNxCVDRES2DiZ3Yu04dgZn”]Government issued a ten-year and seven-year bond with the aim of getting GHc6 billion to offset the legacy debts of the energy sector, which is about GHc10 billion.

But in all, a total of GHc4.69 billion was realized even after a seven-day extension period.

The 7-year component in the first-quarter of 2017, raked in 2.4 billion cedis as targeted, at an interest rate of 19 percent.

However, the 10-year bond failed to hit the 3.6 billion cedis mark.

There are reports that not even the explanation and appeal by government changed the minds of investors who seemingly wanted more interest on their investments.

The Minority at a press conference on Wednesday accused the government of causing financial loss to the state with the energy sector bond.

According to the minority, the below GHc 6 billion yield was a solid basis for the Finance Minister, Ken Ofori-Atta, to be hauled before the House to explain why investment advice from places such as the IMF among others were ignored.

They also accused government of breaching the constitution because it did not seek the approval of Parliament before issuing the bond.

But Kwaku Kwarteng, who is also the Member of Parliament for Obuasi West, whilst speaking to the issue on the Citi Breakfast Show on Thursday, said government pegged the interest rate for the bond at 19% because “we don’t want to overburden the economy with interest payments.”

“We gave instructions to this company [ESLA Plc] that as a matter of government policy, we do not want you to take bond beyond 20%, and so that is how they went to the market. Now on the 7 year bond, the minority is right; some of the investors invested immediately, some of them said that they have been used to buying Ghana bond at 25% or 26%, which was under the previous administration, but why is it that now you want to sell this bond and you are giving us this low, so we are not enthusiastic about it. That is the whole crux; it’s about the price on the bond.”

The Deputy Minister said they tried to convince the investors to patronize the bond telling them that “the macroeconomic fundamentals are better, we think that the things investors should consider when they are lending to a country are far better than 2015, when they were buying government bond at 25 or 26 percent, so they should patronize our bond at the price we are giving and that we don’t want to move.”

“After several engagements – people want to call it begging – we sat down and explained to people, why below 20 is a fair price to give them. Thankfully, we now got all that we want for the seven-year bond at the rate of 19%. Now the 10-year bond we are facing a similar situation. The investors are telling us that if we can even come up to 21%, we will get what we want. We believe that if they do a proper analysis of the economy in the end, they will see at a maximum the 19.5% that we are presenting now as a fair price,” he added.

We’ve not breached constitution over energy bond 

On claims that government breached the constitution for not seeking Parliamentary approval, Kwaku Kwarteng said they did no wrong.

““When you go to the bond market, you are not in a position to sit down and agree on a set of terms, take it Parliament, come back and you get those terms from the different investors. It’s not possible. We think that this press conference was completely unnecessary, bad taste and misinformed…In the eight of years of Rawlings, Mills/Mahama, they’ve never brought any bond issue to Parliament so why are they now asking why we did not take it to Parliament.? The NPP government is clear on what we are doing, we are not going to be pressured to give the kind of unhelpful and imprudent interest rates that we gave to investors. We will continue to engage and we are sure that at the end we are going to get the money that we want,” he added.

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By: Godwin Akweiteh Allotey/citifmonline.com/Ghana
Follow @AlloteyGodwin

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According to the minority, the below GHc 6 billion yield of the bond is a solid basis for the Finance Minister, Ken Ofori-Atta, to be hauled before the House to explain why investment advice from places such as the IMF among others was ignored.

[contextly_sidebar id=”99awLNMOC4C8XY2yuBSGbka4X2Qe33mB”]Addressing the press in Parliament, Minority Spokesperson on Finance, Cassiel Ato Forson, said the complex structure of the bond and unrealistic assumptions by the government caused what the Minority called the spectacular failure of the bond.

“The simple point is that, instead of them issuing a bond called plain vanilla, they decided to use this complex structure that has cost the taxpayer some 200 basis points,” Mr. Ato Forson stated.

The 200 basis marks about 2 percent of the GHc 6 billion sought, amounting to about GHc1.2 million, which he noted “can help the government to finance the Free SHS that they are struggling to settle.

The bond is unrated, per a prospectus issued in October, but an independent special purpose vehicle sponsored by Ghana had the bond hovering around a B-stable rating, according to Fitch, among others.

Mr. Ato Forson insisted that, the government could have saved the aforementioned 200 basis points “if they had gone to the financial market on the strength of government of Ghana ratings, rather than the ESLA PLC which is unrated and unknown.”

Thus he held that, the “government delegation had woefully caused financial loss to the state as a result of their gross incompetence. Because of someone’s gross incompetence, the state is losing GHc 1.2 billion over a ten year period.”

It is, for what he called, “this reckless conduct” and “gross disrespect for the constitution” that the Minority is requesting the Finance Minister be hauled before Parliament.

“This singular failure of the bond issuance in this administration had brought Ghana’s image and integrity into disrepute in the financial market. Ghana has become a laughing stock in the financial market.”

Unsuccessful bond

The bond was issued to offset the legacy debts of the energy sector.

The energy debt is estimated at GHc 10 billion but in all, government accrued some GHc 4.69 billion from the energy bond.

The seven-year component raked in GHc2.4 billion as targeted, at an interest rate of 19 percent.

However, the 10-year bond failed to hit the GHc 3.6 billion mark. It accrued some GHc 2.29 billion at an interest rate of 19.5 percent, meaning, the total amount received was about 22 percent less than the targeted GHc 6 billion.

ESLA was forced to extend the auction by a week over low proceeds.

Improper packaging, uncertainty, as well as the political composition of the Board of ESLA, have been cited as possible reasons for the under-performance of the energy bond.

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By: Duke Mensah Opoku & Delali Adogla-Bessa/citifmonline.com/Ghana

The post Minority chases Ofori-Atta over Energy bond ’embarrassment’ appeared first on Citi 97.3 FM - Relevant Radio. Always.

This represents the first of two bonds issued to raise 6 billion cedis.

A statement on the issue which was copied to Citi Business News indicated that the bond also attracted an interest rate of 19 percent.

Even though government was targeting 2.4 billion cedis, total bids received amounted to GH¢2,529,078,664 billion cedis. It however accepted GH¢2,408,626,000.

Proceeds of the bond will be listed on the Ghana Stock Exchange (GSE).

Settlement is expected to be concluded on 1st November, 2017.

The bond is expected to mature for repayment on 23rd October, 2024.

Meanwhile the managers of the energy bond have announced the extension of the auction for the 10 year energy bond by seven more days.

From the initial scheduled date; Friday 27th October, 2017, auction for the bids will now close on Friday, November 3rd, 2017.

This is the second time that the bids have been extended since it was opened on Tuesday, October 24, 2017.

The successful issuing of the bond is to raise money to pay accumulated debts owed banks and other fuel suppliers in the energy sector.
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By: Pius Amihere Eduku/citibusinessnews.com/Ghana

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According to him, claims by the government that the bond was needed to service the non-performing loans of banks were untenable, as the previous administration had ensured that the debts were being serviced.

[contextly_sidebar id=”8lbfOMUascCJdmP0W0pK4iNrGUPnACA1″]Speaking on the Point Blank segment of Eyewitness News, Isaac Adongo explained that, the Mahama administration had negotiated with the banks to restructure the energy sector debts, and a decision had been taken to end the long-standing subsidies that had been provided to the energy sector companies like the Electricity Company of Ghana and the Volta River Authority.

“All the way back in 2015, a process was started to restructure these debts. We are all aware that as a result of a series of subsidies right from the time of Jerry John Rawlings, through the tenures of Kufuor and Professor Mills. At some point, it was costing us about two billion a year just on subsidies, and we needed to cut it at some point. John Mahama took a bold decision to stop the subsidies, and take stock of where we were in terms of our inability to fund the subsidies to the energy sector companies such as ECG and VRA. That process led to us engaging the banks to renegotiate and restructure those debts so that government will take a decisive step to ensure the debts were serviced,” he said.

“As a result of the process, the interest rate on the dollar component of the loans came down from 12% to 5%, and the interest rate of the cedi component came down from 38% to 22%. We agreed the establishment of an Escrow account managed by the participating banks, the Bank of Ghana and the Ministry of Finance into which the receivables from these companies would go into as a first priority. The second was to get Parliament to pass the Energy Sector Levy Act, that was described in various terms as a nuisance tax and that the President referred to as the reason why electricity tariffs were higher than rent. We ensured that from the proceeds from the loans were now being serviced as restructured.”

Isaac Adongo insisted that, the then government’s efforts had resulted in a turnaround in the rate of the non-performing loans, with banks recording a drop of 2% in the last three months of 2016.

This he said negated the government’s arguments, as the fact that the debts were being “consistently serviced” meant that the loans were no longer non-performing.

“The [NPP] government is quite desperate and the desperation is informed by what they term as the urgency to deal with the Energy sector debt in the banks to the extent that they feel that is creating a problem for non-performing loans and a challenge for the banks. I think that they are trying to create an excuse that only exists in their minds.”

“The Monetary Policy Committee’s own report at the end of January 2017 for the year ending 2016, made it quite clear that the non-performing loan portfolios of our banks began to decline from 19% in October to 18% in November, and to 17% in December. This excluded an amount of $165 million that was disbursed in December from the ESLA. As a result, you cannot describe a loan that has been serviced to date as non-performing. How else does a loan perform?” he queried.

Government is reportedly targeting at least 19 percent interest rate on the energy bond to be issued to clear the debts in the energy sector.

This is relatively higher compared to the estimated 18 percent rate on the ten-year domestic bond.

Sources close to the bond issue also indicate that, the corporate nature of the energy bond has influenced the decision to peg anticipated interest rate above that of the current ten-year domestic bond issued by the government of Ghana, which is estimated at 18 percent.

The IMF and government are expected to reach an agreement on the mode of issuing the bond this week, which should also clear the way for the issuance of the energy bond by close of this week.

An earlier statement on the bond indicated that, the first tranche is expected to raise 6 billion cedis; the equivalent of 1.3 billion dollars.

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By: Edwin Kwakofi/citifmonline.com/Ghana

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The building which collapsed on Wednesday has now been cordoned off by the National Disaster Management Organization (NADMO).

Anita Desooso, the deputy NADMO coordinator, who confirmed the incident to Citi News, said, “it happened yesterday in the afternoon around 3 pm.”

According to the deputy NADMO coordinator,  preliminary investigations reveal the building collapsed because of poor maintenance.

“ It was due to mismanagement and poor maintenance of the structure , I learnt that  it was only yesterday that they(the occupants) went to inform the landlady about the problems they had with the structure but unfortunately the building collapsed in the afternoon,” she explained.

When asked the whereabouts of the families that occupied the building, she said they were lodging with other family members.

Madam Desooso also told Citi News they were waiting for the structural engineers to complete their investigations before they (NADMO) proceed to pull down the building, because “it is not safe to live in such a building”.

By: Raymond Acquah/Citifmonline.com/Ghana

The post Building collapses in Bubuashie; 40 escape unhurt appeared first on Citi 97.3 FM - Relevant Radio. Always.