Finance Ministry to write off $141milion GRIDCo debt

Business News of Saturday, 10 November 2018

Source: citibusinessnews.com

2018-11-10

Finance Minister, Ken Ofori-Atta

The Finance Ministry may write off about 141 million dollars debt sitting on the books of GRIDCo.

The debt was incurred after GRIDCo was formed out of the Volta River Authority.

The debt has in recent times affected the operations of the state power delivery company, making it unattractive to investors.

Speaking to Citi Business News after GRIDCo’s Annual General Meeting, Deputy Minister for Energy Joseph Cudjoe was hopeful the clearance of the debt will give GRIDCo a fresh financial start.

“It is expected to have being signed off by the Finance Minister anytime from now so that GRIDCo’s balance sheet would have been cleaned off that indebtedness. Proposals have been made to clear off 141 million dollars. It is in two parts, one part is 120 million dollars another part is 21 million dollars” he said.

Mr. Cudjoe explained that it makes sense to convert debt into equity since the debt is owed by the Volta River Authority, another state company in the power sector.

He pointed out that since government is the major shareholder, it will prudent for government to take that debt and write it off.

The Deputy Minister however warned that it is imperative for GRIDCo to be efficient since government will demand accountability from the company.

“Whilst we make the effort to address the cost of financing challenge, we also request you to be efficient in the area of general and administrative expenses,” he said.

“It is instructive to note that Government seeks to improve transparency of tariff setting process, in particular decision making, basic principles and objectives in tariff making process, and data used in the decision making process,” he added.

He stated that this is to improve predictability of tariff adjustments in the power sector.

He announced that the Ministry of Energy and the Ministry of Finance will in the next few days hold discussions with the power sector utilities and the PURC to deal with the ambiguities surrounding the tariffs.

Meanwhile, Mr. Cudjoe announced that government may be issuing the second tranche of the Energy Bond to clear the legacy debt as the market conditions improve.

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