Business News of Saturday, 5 August 2017
Commercial banks involved in the energy sector debt are expected to be paid by the middle of this month – August using funds generated from the country’s energy bond.
The development follows the issuance of the 15-year energy bond to clear the $2.4 billion debt.
Commenting on the energy sector debt repayment to banks, the Managing Director of Cal Bank, Frank Adu Jnr, said the initiative should correct the statement of financial position of the many banking institutions concerned.
He also expressed the view that the development will help in restoring public confidence in the banking sector that has been largely damaged by the legacy debt.
Cal Bank forms part of the banks with a substantial interest in the energy debt but its MD claims they have adequate measures to lessen its effect on the bank’s liquidity position.
“This is not killing the bank because we took our provisions after the financial sector review and our capital adequacy ratio is still 19 percent so we are very well capitalized and we have provisioned for the BDC exposure,” he said.
As at December 2016, PrimeBusiness gathered that net debt to banks and fuel suppliers was approximate $1.3 billion with the banking institutions owed about 782 million dollars of the total amount and the remaining $440 million owed to fuel suppliers.
The Volta River Authority is believed to owe $782 million to the banks as well as $278 million of the $440 million owed to fuel suppliers, while TOR owes 162 million dollars.