Skip to main content

Govt. commended for developing plans to pay SOEs electricity debt


By: Fred Yaw Sarpong

Dr. Mohammed Amin Adam, an Executive Director at Africa Center for Energy Policy (ACEP) has commended the government for developing a five year plan to settle the Electricity Company of Ghana (ECG) GHc728 million debt owed by the State-Owned-Enterprises (SOEs) in the country.

“It’s very important for the government to pay the debt so that ECG will also settle the Volta River Authority (VRA) and Asogli for the power they have produced for Ghanaians to consume,” he added.

Dr. Amin Adam said the plan is one of the conditions of Ghana’s Compact under the Millennium Challenge Account (MCA). “It’s one of the conditions for the government to pay the debt of ECG before money will be disbursed to Ghana. My problem is why should government wait for America to come and tell us to pay the debt,”? he asked.

Secondly, he told the Daily Express that even though government has develop plan to pay the debt, the issue is not about paying the debt but whether government is not going to incur new debt.

“The only way government will avoid additional debt is to find a way to pay the bills for the consumption of electricity by the government agencies,” he pointed out.

“But if the agencies are going to have power from the ECG and they will not pay for it then another debt will be accumulated and that wouldn’t have solve the problem,” he told the Daily Express.

The energy expert said government should find mechanism to pay for the power they consume in order not to accumulate new debt.

He emphasized that there are budgets on power allocated to every Ministry as part of their expenditure. “The problem is that either the monies are not release by the Finance Ministry or if the monies are given to the Ministries they don’t use it for the power consumption but something else.”

He said “it’s the Ministries which have to make sure that electricity consumption is one of the priorities on their expenditure list.”

The Finance Minister, Mr. Seth Terkper announced at a press briefing that the government has conducted an assessment of arrears between the government and SOEs and cross-SOEs‟ arrears and prepared an action plan and a timeline for their elimination

He said this will include improving the repayment the “legacy debt” to ECG in the amount of GHc728 million over five years Significant

According to the Minister, this formed part of the SOE reforms being implemented. He said the reforms are to strengthening monitoring and evaluation; Private sector participation; and strengthening governance.

He said the reforms include the introduction of performance management contracts for senior managers which will include targets for reducing losses as well as a framework facilitating monitoring of SOEs by the Office of the President, the Ministry of Finance, the relevant committee of Parliament and sector Ministry in order to strengthen operational and financial discipline.

Also, there will be evaluation of potential for private sector participation in SOEs; and conducted an assessment of SOE's governance and action plan for reforms being prepared. “This will include strengthening of oversight of SOEs,” he added.

Meanwhile, Mr. Terkper said although a formal agreement has not yet been entered into, in July 2016 lenders (domestic banks) have agreed a framework to the restructuring and repayment of VRA debt of about GHc2.2 billion over 3 to 5 years Key features of the agreement in principle:

He mentioned upfront payment of approximately GHc250 million which will be funded by the new collections from the energy sector levies; reduction of interest rate on the GHC component of the VRA debt from an average of 30% to 22%; and reduction of interest rate on the foreign currency component of the VRA debt from an average of 11% to 8.50%.

Also repayments will be funded from a debt service account which will receive cashflows from (i) the energy debt recovery levy and a debt service reserve; and (ii) a proportion of VRA's receivables; proceeds of the energy debt recovery levy which are applied to VRA debts will be converted into equity on VRA's balance sheet or could be subject to an on-lending arrangement with the government; and government will place limits on the ability of VRA to incur new indebtedness without express approval The government anticipates that this approach will be used to restructure VRA's as well as the debt of other energy-sector SOEs


Comments

Post a Comment

Popular posts from this blog

Vodafone sells 45% shares in Verizon for US$130 billion

Vodafone has sold its 45% stake in Verizon Wireless to US telecoms group Verizon Communications in one of the biggest deals in corporate history. The US$130 billion (£84bn) deal was announced by Vodafone after the close of trading on the London Stock Exchange. The company will return £54 billion to its shareholders, of which £22 billionn will go to shareholders in the UK. Vodafone will also invest money in its business, with funds earmarked for high speed mobile phone networks. It said that by 2017 its main five European markets would have almost complete 4G coverage. Possibly it would be wrong to carp and wring hands that Vodafone won't be paying a penny of tax to the British taxman” Vodafone group chairman Gerard Kleisterlee said: "The transaction will position Vodafone strongly to pursue our leadership strategy in mobile and unified communication services for consumers and enterprises, both in our developed markets and across our emerging markets businesses." The...
Post a Comment
Read more

Shortage of weighing cards hit major hospitals in Accra

By: Fred Yaw Sarpong- Daily Express There is scarcity of Child Health Records Book (weighing cards), in some major public hospitals in the capital, information reaching the Daily Express indicates. Checks by this paper revealed that while some of the hospitals have being encountering the shortage for about a year now, others started experiencing it six months ago. In place of the Child Health Record Book (weighing card), the nursing mothers are given a single card on which information of children are recorded on it. Those hospitals identified are the Korle Bu Teaching Hospital, Korle Bu Polyclinic, Kaneshie Polyclinic, Adabraka Polyclinic and the Ridge Hospital. At the Korle Bu Teaching Hospital, the nursing mothers are given yellow cards in place of the weighing cards. The Public Relations Secretariat at the Korle Bu Teaching Hospital said such information has not come to their notice and for that matter they cannot comment on it. “We do not have some ...
Post a Comment
Read more

ABL launches chibuku super in Bolgatanga

By: Fred Yaw Sarpong sarpong007@gmail.com Accra Brewery Limited (ABL) has officially launched the Chibuku Super drink at Bolgatanga in the Upper East region with the aim of reaching a lot of customers. Mr. Thomas Nii Ponku, Supervisor in charge of Chibuku Super at ABL told Daily Express that the management decided to launch the Chibuku Super drink in the Upper East region because they’ve realized it is similar to a traditional drink in the region. “Chibuku is like a well developed pito, a traditional drink made from fermented millet or sorghum in the Northern part of Ghana. So the idea is to provide them with similar drink,” he added. Mr. Nii Ponku disclosed this when members of the Institute of Finance and Economic Journalists (IFEJ) toured the facility of ABL to acquaint themselves with the expansion project at the factory. He mentioned that after a feasibility study, they realized there is a potential market for the product in the northern part of Ghana ...
Post a Comment
Read more