Accra, Feb.19, GNA –
The Government has completed the payment of all legacy debts owed the Bulk Oil
Distribution Companies (BDCs) and Banks towards reducing the Non-Performing
Loans (NPLs) in the banking sector and strengthening the operations of the
BDCs.
It comprises a total
of GH¢515,407,047 for Real Value Factor (RVF) and $99,667,917 for Forex Loss
Under-Recovery Interest (FLURI).
A statement issued
by the Public Relations Unit of the Ministry of Finance and copied to the Ghana
News agency, on Wednesday, said following an Ernst& Young validation of the
claims based on the agreed terms reached by the Ministry of Finance, Central
Bank and the BDCs, it saved the nation GH¢324,571,093 (39%) on the RVF and
$33,682,708 (25%) on the FLURI respectively.
The debts were
settled in full with proceeds from Energy Sector Levy Act bonds, under Energy
Sector Levy PLC, issued in June 2019 and in January 2020, it explained.
These were not
Central Government debts due the BDCs it inherited through ESLA PLC.
Giving the
background to the debt, the statement said in early February 2017, the Ministry
received a letter from the Chamber of Bulk Oil Distributors (CBOD) demanding
for the payment of outstanding claims.
These included
$140,609,313 of Forex Loss Under-Recovery (FLUR) for the period 2011 – 2015 due
which had been validated by Ernst & Young (EY) and was agreed and signed
off by the previous Government.
Others were an
additional Forex Loss Under-Recovery (FLUR) amount of $44,847,784 due for the
period 2011 – 2013, which was not yet validated, a Real Value Factor (RVF)
amount of GH¢541,058,361 and a Forex Loss Under-Recovery Interest (FLURI)
amount of $108,563,490, which were yet to be validated.
“Forex Loss
Under-Recovery (FLUR) is the loss incurred by the BDCs as a result of the
differentials between the GH¢/USD$ foreign exchange rates determined by the
National Petroleum Authority (NPA) for the pump prices and the rates at which
the forex rates were supplied by the Bank of Ghana on behalf of the Government
of Ghana (GoG), it explained”.
“Forex Loss
Under-Recovery Interest (FLURI) on the other hand, is the interest accrued on
the delayed payments of forex loss under-recoveries, while Real Value Factor
(RVF) is the interest accrued on the delayed payments of price
under-recoveries”.
The statement said,
the Government since 2017, had taken a number of steps to evaluate, validate
and settle the total amount due the BDCs and Banks.
“The steps included
settling the agreed and signed off validated but still outstanding forex loss
under-recovery amount of $140 million through the ESLA Bond Issuance on
November 9, 2017 and appointment of EY to validate the unvalidated additional
forex loss claim of $44.83 million.
“The validation
exercise resulted in a reduction of $19.15 million for the amount claimed,
(representing 43 per cent savings) from $44.83 million to $25.68 million”.
The statement said
to determine if the claims for RVF and FLURI were worth considering or should
be disregarded, the Ministry commissioned a five-member committee with
industrial and practical experience within the petroleum downstream sector to
review and advise the Ministry on the validity of the RVF and FLURI claims.
The committee
concluded in their report that, given the nature of the downstream business
operations and its associated risks as well as Government’s policy on fuel
subsidy at the time, the grounds for claims for RVF and FLURI were genuine and
thus advised the Government to validate the amounts and settle it.
The Economic Management
Team (EMT), subsequently, directed the Ministry and the Central Bank to invite
the BDCs to a discussion with respect to the RVF and FLURI amounts and to
review the process used and interest rates applied to come up with the
settlement amounts.
“Based on the
discussion and the terms agreed among, the MoF, BoG, BDCs, and EY were
requested to validate the amounts claimed for RVF and FLURI, using 31st March
2018 as the cut-off date for the validation.
The claims as of
that date per the BDCs, stood at GH¢839,978,140 and $133,350,625 for RVF and
FLURI respectively.
The EY validation
based on the agreed terms resulted in an amount of GH¢515,407,047 and
$99,667,917 for RVF and FLURI respectively, as against GH¢839,978,140 and
$133,350,625 that had been initially claimed translating into a saving of
GH¢324,571,093 (39%) and $33,682,708 (25%) respectively.
GNA