Finance Minister Seth Terkper has disclosed that power companies in the country will be compelled to issue corporate bonds very soon as government helps clear the legacy debt.
According to him, the refinancing of the legacy debt of 4.4 billion cedis owed to the 12 commercial banks is currently being borne by taxpayers.
Speaking at a press conference, Mr. Seth Terkper stated that government has directed the power companies to prepare plans of converting their debts incorporate bonds.
“What we are talking about is the possibility of converting some of these debts working with the same banks, particularly the asset management unit to float corporate bonds,” he said.
He explained that it is pertinent for the State Owned power companies to build confidence with the financial system to encourage banks to list debts as corporate bonds in the future.
He was of the view that the recovery of debts owed to the banks will improve the relationship between the banks and the State Owned power companies.
“Gradually there will be confidence coming back between the banks and the SOEs and we think that we happy with the turn around that we are seeing,” he said.
Measures to clear debts
The Ministry of Finance, the Bank of Ghana (BoG), and the Ghana Bankers Association have announced plans to pay the legacy debt owed by the power sector.
According to the Ministry of Finance, government has arranged with the Bank of Ghana to create an escrow account to transfer 250 million cedis to settle part of the debts owed to 12 banks in the country.
The banks include Ecobank, Stanchart, Unibank, Zenith bank, GT bank, UBA, UMB, CAL bank, ACCESS bank, Stanbic bank, Fidelity bank, First Atlantic bank, Ghana International bank among others.
Govt’s agreement with banks
Government has negotiated a reduction of interest rate on the cedi component of the VRA debt from an average of 30 percent to 22 percent.
In addition, government negotiated for a reduction of interest rate on the foreign currency component of the VRA debt from an average of 11% to 8.50%.