Alhassan Andani, MD, Stanbic Bank
Alhassan Andani, President of the Ghana Association of Bankers (GAB), has indicated that government will soon release GH¢166 million to some banks to clear all the energy sector debts.
Mr Andani, who spoke to the media in Accra, said the payment of GH¢166 million, which represent the third tranche government was advancing to banks, would bring the total amount paid so far to about GH¢582 million.
This, according to him, could help improve the banks’ financial position and possibly reduce the cost of credit.
Per agreements government reached with the said banks, they would receive payments by installments every quarter for a period of five years.
Debts owed to some leading banks in the country in connection with energy sector debts reached almost GH¢2.2 billion debts as of August, this year.
The banks could have collapsed if government had not disbursed the amount to them.
Government decided to restructure the legacy debts of State Owned Enterprises (SOEs) to help the Volta River Authority, Tema Oil Refinery (TOR) and Bulk Oil Distributing Companies.
Seth Terkper, Minister of Finance, said it was the first major collaboration between the Ministry, Central Bank and major banks in the country.
He noted that the payments would be funded by collections from the energy sector levies: Energy Debt Recovery Levy, Public Lighting levy, Price Stabilisation and Recovery Levy and the National Electrification Scheme Levy backed by the Energy Sector Levies Act.
Under the VRA agreement, which would restructure approximately half of the debt on the VRA’s balance sheet, an upfront payment of GH?250 million would be made.
It would also be paid to the banks on behalf of VRA from the new collections from the energy sector levies.
The key arrangers in the VRA agreement were Ecobank Ghana Limited, Stanbic Bank Ghana Limited and Standard Chartered Bank Limited.
He explained that the agreement would also see a reduction in the average interest rate on the debt from 30 percent to 22 percent, and reduction in the interest on foreign currency component of the VRA debt from 11 to 8.5 percent, which could result in savings of about GH?350 million.
By Samuel Boadi
samuel10gh@yahoo.com