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ONE MORE TRANCHE OF BANKS’ LEGACY DEBT TO BE REPAID BY END AUGUST

General News

Banks which are exposed to legacy debts in the energy sector say they are expecting disbursements by the end of this month to defray part of the outstanding debt.

Banks which are exposed to legacy debts in the energy sector say they are expecting disbursements by the end of this month to defray part of the outstanding debt.

They also anticipate a swift clearing of the remaining amount following Parliament’s approval of the increase in the Energy Sector Levy.

Ring-fenced debt

The New Patriotic Party government inherited an energy sector debt in 2017estimated at US$2.4 billion, equivalent to GHC10 billion.

The latest disbursements will follow the government decision to ring-fence the monies owed to prevent additional debt from accruing.

The Energy Sector Levy Act (ESLA) bond, which was issued in 2017, has so far raised GHC6.665 billion, leaving a remainder of GHC3.35bn to be issued.

Initially, the bond was offered in two tranches, seven years (which raised GHC2.26bn) and ten years (GHC2.74bn).

Another ten-year bond has been issued this year, which raised GHC1bn and is expected to mature in 2029.

“Encouraging” move

The various institutions which provided letters of credit, including power producers as well as banks, are being paid out of the monies raised so far.

Meanwhile, the managing director of Republic Bank, Farid Antar, described the move as encouraging. In an interview with the Accra-based Citi FM radio station Mr Antar said the banks expect to access another disbursement by the end of this month.

“We do not have too many concerns there right now, but definitely any recovery or payment of the debt owed us is definitely welcome.

“It is yet to be finalised, but we are hoping to get some payments before the end of August or middle of August [towards] what we would like or what we would actually end up getting,” he said.

Non-performing loans

In a related development, the Bank of Ghana (BoG) has announced that banks’ non-performing loans reached 18.1 per cent in June this year.

The Governor of the BoG, Dr Ernest Addison, believes this figure could fall when the exposure to the energy sector debts is addressed.

This is because the core non-performing loans of banks constitute about 9 per cent of the figure.