The Minister of Finance, Kenneth Ofori Atta is likely to be hauled before Parliament anytime soon to answer to some critical issues bothering on the country’s GH₵10 billion energy sector bond it intended issuing to boost the economy.
This follows the discovery of some breaches of the Energy Sector Levy Act (ESLA) and the constitution of the Republic of Ghana by the Minority National Democratic Congress (NDC) Members of Parliament (MPs).
The government in a recent public notice announced the issuance of an energy sector bond with the hope of raising GH₵6billion and a possibility of an additional GH₵4billion, making a total of GH₵10billion.
Initially, the government was expecting to raise about GH₵2.4 billion from the issuance of a 7 year bond and about GH₵3.6 billion from the issuance of a 10 year bond, for a total of GH₵6 billion.
But the hope of realizing this amount was dashed following the lack of confidence of investors in the Ghanaian economy.
After an extensive road show the 7 year bond that was expected to raise the GH₵2.4 billion could only close with a subscription of GH₵1.5 billion, representing 62.5%, even after an extension of the closing date of the bond.
Additionally, the government could also only raise GH₵760 million out of the projected GH₵3.6 billion from the year bond, representing 21% of the expected amount. Despite the extension of the closing date for the year 10 year bond, the government could only raise GH₵2.2 billion out of the targeted GH₵3.6 billion, representing 61%.
The amount was purposefully to finance the country Energy Sector Debt by leveraging on ESLA for the issuance of the bond.
Addressing a press conference, Wednesday, on the failure of the government to raise the GH₵10 billion bonds, the Ranking Member of the Finance Committee, Casiel Ato Forson, said the Minority is well aware of some breaches of the ESLA and would do everything within their might to haul the Finance Minister before Parliament for questioning.
“The government went into the international market to raise an amount of GH₵6billion with a possibility of an additional GH₵4billion, making a total of GH₵10billion with a vehicle called ESLA PLC, i.e. Energy Sector Levy Act Public Limited Liability Company. The Energy Sector Levy is a public tax measure enacted by an Act of Parliament. The government by forming a public limited liability company using tax revenue approved by Parliament without prior parliamentary approval is in a clear breach of Ghanaian law. Assigning the Energy Sector Levy Act to the issuer’s amounts to collateralization of tax revenue without prior approval of Parliament, which is illegal and unconstitutional. Furthermore, the formation of a public limited company without prior parliamentary approval is illegal and unconstitutional”, he noted.
In the view of the Minority, the prospectus that was issued on October 17, 2017, the ESLA PLC “is unrated but an independent special purpose company which is being sponsored by the Government of Ghana.”
To them, the government could have saved up to 200 basis points if they had gone to the financial market on the strength of Government of Ghana ratings, rather than the ESLA PLC which is unrated and unknown.
“Simply put, the state could have saved 2% of GH₵6 billion times 10 years, which is an equivalent of GH₵1.2billion over the period. The government delegation has woefully caused financial loss to the state as a result of this gross incompetence”, the statement read by Hon. Forson in part stated.
Based on this together with some others, the Minority wants Mr. Ofori Atta to be hauled before Parliament to answer to circumstances that led to the willful breaches of the laws and constitution of the Republic.
They also want apology from the Finance Minister for denting the image of the country through his conduct which resulted in the failure of the bonds issuance.
Furthermore, they want the government as a matter of urgency, to conduct a comprehensive audit of the Energy Sector Debt with a view to providing an update.