{"id":244610,"date":"2016-08-31T15:07:30","date_gmt":"2016-08-31T15:07:30","guid":{"rendered":"http:\/\/citifmonline.com\/?p=244610"},"modified":"2016-08-31T15:07:30","modified_gmt":"2016-08-31T15:07:30","slug":"govt-clears-ghs250m-out-of-ghs4-4bn-energy-debt","status":"publish","type":"post","link":"https:\/\/citifmonline.com\/2016\/08\/govt-clears-ghs250m-out-of-ghs4-4bn-energy-debt\/","title":{"rendered":"Govt clears GHS250m out of GHS4.4bn energy debt"},"content":{"rendered":"<p>The Ministry of Finance, the Bank of Ghana (BoG), and the Ghana Bankers Association have announced plans to pay the legacy debt owed by the power sector.<\/p>\n<p>According to the Ministry of Finance, government has arranged with the Bank of Ghana to create an escrow account to transfer 250 million cedis to settle part of the debts owed to 12 banks in the country.<\/p>\n<p>The banks include Ecobank, Stanchart, Unibank, Zenith bank, GT bank, UBA, UMB, CAL bank, ACCESS bank, Stanbic bank, Fidelity bank, First Atlantic bank, Ghana International bank among others.<\/p>\n<figure id=\"attachment_62398\" aria-describedby=\"caption-attachment-62398\" style=\"width: 913px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/citibusinessnews.com\/wp-content\/uploads\/2016\/08\/debt.png\" rel=\"attachment wp-att-62398\"><img loading=\"lazy\" class=\"size-full wp-image-62398\" src=\"http:\/\/citibusinessnews.com\/wp-content\/uploads\/2016\/08\/debt.png\" alt=\"Source: Ministry of Finance \" width=\"913\" height=\"456\" \/><\/a><figcaption id=\"caption-attachment-62398\" class=\"wp-caption-text\">Source: Ministry of Finance<\/figcaption><\/figure>\n<p>Speaking \u00a0at a press conference in Accra, the Minister of Finance Seth\u00a0 Terkper disclosed that government owes the banks, approximately\u00a0 4.4 billion cedis, after negotiating the interest rate on the dollar component from 11 percent to 8.5 percent, while the cedi component was reduced from 30 to 22 percent.<\/p>\n<p>\u201cAs I speak, government has made an upfront payment of approximately GHS250 million which will be funded by the new collections from the energy sector levies. The money is in an account with the Bank of Ghana and will be paid to the banks as planned,\u201d he said.<\/p>\n<p><strong>Govt\u2019s agreement with banks<\/strong><\/p>\n<p>Outlining some key features of the agreement with the banks, Mr. Terkper emphasized that government was able to negotiate a reduction of interest rate on the GHS component of the VRA debt from an average of 30 percent\u00a0 to 22 percent.<\/p>\n<p>\u201cIn addition, we also negotiated for a reduction of interest rate on the foreign currency component of the VRA debt from an average of 11% to 8.50%,\u201d he said.<\/p>\n<p><a href=\"http:\/\/citibusinessnews.com\/wp-content\/uploads\/2016\/08\/debt-2.png\" rel=\"attachment wp-att-62399\"><img loading=\"lazy\" class=\"aligncenter size-full wp-image-62399\" src=\"http:\/\/citibusinessnews.com\/wp-content\/uploads\/2016\/08\/debt-2.png\" alt=\"debt 2\" width=\"770\" height=\"558\" \/><\/a><\/p>\n<p>In all, he stated that the reduction led to government cutting down the cost of the debt by about 300 million cedis.<\/p>\n<p>He explained that repayments will be funded from a debt service account which will receive cashflows from the energy debt recovery levy and a debt service reserve as well as a proportion of VRA&#8217;s receivables.<\/p>\n<p>\u201cProceeds of the energy debt recovery levy which are applied to VRA debts will be converted into equity on VRA&#8217;s balance sheet or could be subject to an on-lending arrangement with the government,\u201d he added.<\/p>\n<p><strong>Placing limits on VRA<\/strong><\/p>\n<p>Mr. Terkper stated that government will place limits on the ability of the VRA to incur new indebtedness without express approval.<\/p>\n<p>\u201cGovernment anticipates that this approach will be used to restructure VRA as well as the debt of other energy-sector SOEs,\u201d he said.<\/p>\n<p><a href=\"http:\/\/citifmonline.com\/2016\/08\/31\/govt-clears-ghs250m-out-of-ghs4-4bn-energy-debt\/debt-3\/\" rel=\"attachment wp-att-244621\"><img loading=\"lazy\" class=\"aligncenter size-full wp-image-244621\" src=\"http:\/\/citifmonline.com\/wp-content\/uploads\/2016\/08\/debt-3.png\" alt=\"debt 3\" width=\"746\" height=\"524\" \/><\/a><\/p>\n<p>He announced that \u00a0government has conducted an assessment of arrears between the government and SOEs and cross-SOEs\u2019 arrears and prepared an action plan and a timeline for their elimination.<\/p>\n<p><a href=\"http:\/\/citifmonline.com\/2016\/08\/31\/govt-clears-ghs250m-out-of-ghs4-4bn-energy-debt\/debt-4\/\" rel=\"attachment wp-att-244622\"><img loading=\"lazy\" class=\"aligncenter size-full wp-image-244622\" src=\"http:\/\/citifmonline.com\/wp-content\/uploads\/2016\/08\/debt-4.png\" alt=\"debt 4\" width=\"745\" height=\"517\" \/><\/a><\/p>\n<p>\u201cThis will include improving the repayment the \u201clegacy debt\u201d to ECG in the amount of GHS728 million over five years,\u201d he assured.<\/p>\n<p><strong>Appreciation from other bodies<\/strong><\/p>\n<p>On his part, the President of the Ghana Bankers Association, Alhassan Andani stated that the association is impressed with modalities set by government to use the Energy Sector Levy to pay the debt in a period of 2 to five years.<\/p>\n<p>First Deputy Governor of the Bank of Ghana, Mr. Millison Narh also stated that the Central Bank contracted four reputable auditing firms to value the assets of the SOE in Energy to ascertain the viability to pay the debt in the stipulated period.<\/p>\n<p>&#8211;<\/p>\n<p>By: Lawrence Segbefia\/citibusinessnews.com\/Ghana<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Ministry of Finance, the Bank of Ghana (BoG), and the Ghana Bankers Association have announced plans to pay the legacy debt owed by the power sector. According to the Ministry of Finance, government has arranged with the Bank of Ghana to create an escrow account to transfer 250 million cedis to settle part of [&hellip;]<\/p>\n","protected":false},"author":14,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[121,32,171,10],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Govt clears GHS250m out of GHS4.4bn energy debt - Citi 97.3 FM - Relevant Radio. 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