Gov’t eyes 5yrs to clear Gh¢4.4bn Energy Sector Legacy debt

It will take between three to five years for the government to settle the Gh¢4.4 billion it owes as Energy Sector legacy debt.

This was the conclusion reached by the Central Bank, the Ghana Association of Banks, power providers and the Ministries of Petroleum and Power following negotiations.

The debt owed 11 banks is said to be the major risk that can collapse some of the banks and threatens reliable power supply.

The banks include Ecobank, Stanchart, uniBank, Zenith Bank, GT Bank, UBA, UMB, CAL Bank, ACCESS Bank, Stanbic Bank, Fidelity Bank, First Atlantic Bank, and Ghana International Bank.

The Energy Sector Levies Act, passed in December 2015, made provision for the ‘Energy Debt Recovery Levy’ and for the Finance Ministry ‘to open and maintain an account’ into which payment of monies collected in respect of same are to be paid.

Per the new petroleum price build up, GHp41 is charged per litre of petrol and litre of diesel, while GHp37 is charged per kilogramme of LPG for the Energy Debt Recovery Levy.

The Energy debt service account which has a total of four separate accounts has about GHC280 million. It is a combination of – Power Generation and Infrastructure Levy, Energy Debt Service Account, Price Stabilization Levy.

An Escrow account created by the Bank of Ghana has been created to receive the flows from the various accounts that have been created.

The account is to transfer GHC250 million to settle part of the debts owed to 11 banks from September 2016.

The finance minister, Seth Terkper, who gave this breakdown at a media briefing today, believes that if the flows into the account are healthy, the debt will be cleared in the next three to five years.

Meanwhile, the Ghana Association of Bankers has welcomed the latest move by government to settle the debt but wants it to refrain from pricing essential utilities.

President of the Association, Alhassan Andani told Starr Business the development will in no way deter them from doing business with the VRA in future, “not just our members, other lenders outside the country will go back to do business with VRA. You can see from the number of banks in there (present at the Press briefing) that there is a lot of appetite for VRA risk.”

Source: Ghana/ Owusu Amankwaah

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