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Govt will issue 15 yr bond to clear $ 2.4bn energy debts- Bawumiah tells IMF

Berlinda Entsie

Government has announced plans to issue a 15 year bond to settle all outstanding debts in the energy sector.

Ghana's vice president Dr. Mahamadu Bawumiah
Ghana's vice president Dr. Mahamadu Bawumiah

The development is being undertaken by government to improve the financial strength of the State Owned Enterprises (SoEs) in the energy sector and make them competitive.

Addressing participants at the ongoing Spring Meetings in Washington, DC, Vice President Dr. Mahamudu Bawumia said he is confident of increased investments to the SoE’s with the complete repayment of the debt.

READ ALSO: I wasn’t privy to $2.25bn bond issue – Gloria Akuffo

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“There is a 2.4 billion dollar debt that is hanging over the neck of state owned enterprises…What we are going to do is to issue a 15 year long term bond to deal with this debt”.

He also explains that government will have one bond which will pay all those liabilities and government will service those bonds with the Energy Sector Levies Act(ESLA) revenues.

It is a meter situation that will allow the space for our energy companies to have stronger balance sheets to grow, invest and attract investments, he added.

Gov’t debt hit 2.3 billion dollars in 2016

Government’s indebtedness to the energy sector has been cited as one major threat to the growth of the sector.

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READ ALSO: Ignore Minority’s claims on bond auctions – Finance Ministry

Reports say government’s net debt in the Energy sector was 2.3 billion dollars.

A breakdown indicated that net debt to banks and fuel suppliers amounted to 1.3 billion dollars.

A further breakdown also showed that the banks are owed 782 million dollars, while fuel suppliers are owed 440 million dollars.

State owned power producer, the Volta River Authority (VRA) owed the banks to the tune of 782 million dollars.

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VRA also contributed 278 million dollars to the 440 million dollars owed fuel suppliers, while TOR contributed 162 million dollars.

Energy Sector Levies Act

The past NDC government in 2015 passed the Energy Sector Levy Act (ESLA) to among others provide revenue to finance the debts.

READ ALSO: $2.25bn bond didn’t need AG’s advice - NPP

Government is said to be raking in an estimated 500 million dollars annually from the ESLA.

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In Dr. Bawumia’s view, this should lessen the burden in refinancing the 15 year bond aimed at settling the debt in the energy sector.

Berlinda Entsie Berlinda Entsie Berlinda Entsie a reporter at Pulse.com.gh/bi/. She reports on all your business related issues and always ready to promote your business through amazing reportage.

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