Banks pressurize Gov’t to release BDC debts payment plan

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Despite hints by the Akufo-Addo government to issue a US$2.24billion bond in the coming days to pay the huge debt burdening the country’s energy sector, Banks that are exposed to the Bulk Oil Distribution Companies (BDCs’) debts want government to draw out a plan to facilitate payments from the Energy Sector Levies Act [ESLA].

They argue that the plan will facilitate payments and help them make the necessary provisions accordingly.

However, Kojo Oppong Nkrumah, deputy Information Minister disclosed fortnight ago that, the issuance of the bond is part of efforts by government to raise money over a long profile to pay the energy sector debt off out-rightly.

But, he failed to disclose whether the bond will be issued domestically or otherwise.

“We have just successfully done a $2.25billion bond and we are looking at how to raise an extra of about $2.24billion to pay off that debt in a single bullet and to have that single bullet amortized with the energy sector levies that are still existing,” he said.

Meanwhile, explaining the impact of the absence of a detailed plan on the repayment scheme for banks, the Executive Director of CAL Bank, Philip Owiredu said the banks have been finding difficulty adjusting for the unpaid debts.

“Unfortunately, government has not been able to put any structure round the regular cash flow coming out from this levy to be able to model anything and determine how much to be disbursed every month,” he asserted.

Mr. Owiredu was responding to questions during the bank’s fact behind the figures session for its first quarter performance for 2017.

According to him, even though some payments are being effected, an agreed plan should help both government and the affected banks. Claims accruing to the BDCs for 2014 and the first half of 2015, amounted to GHC2.5 billion.

Although accurate figures are yet to be reported on their claims post 2015, the banks are projecting the figure to increase to about GHC4.0 billion.

Government has since made payments totaling GHC1.5 billion with an outstanding amount of GHC1.9 billion.

Philip Owiredu further stated that the model should help reduce the rising NPLs of banks. “The law says the levy shall be in place for ten years and on an annual basis, out of the levy, at least about GHC90 million is going to be used to pay the BDCs,”

“So the cashflow is coming in and it is being held by banks including CAL bank and that is what we want to engage government on to ensure that at least we agree on what we are supposed to do whether it is going to take a year or ten to get it through,” he observed.

President Akufo-Addo revealed in his maiden State of the Nation Address that the country’s energy sector is saddled with huge debts threatening reliable power supply if immediate measures are not taken.

He said attempts by the former administration to solve the debilitating power crisis that hit the country led to a debt of over US$2billion.

“The attempts by the previous government to resolve the dumsor crisis have led to a gargantuan debt overhang in the sector…we have inherited a heavily indebted energy sector, with the net debt reaching US$2.4 billion as at December 2016,” he stated.

Source: Adnan Adams Mohammed



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