Gov’t Scheming To Leverage Energy Levy For $2.4bn Bond

The Minority side in Parliament is alleging that the governing New Patriotic Party (NPP) is planning to raise a bond of $2.4 billion bond using the energy sector levy as collateral for a period of 15 years.

A National Democratic Congress (NDC) Member of Parliament for Bolgatanga Central constituency,l and also a member of Parliament’s Finance Committee, Isaac Adongo, who made the claim on Eyewitness News on Wednesday, chastised government over the issue, claiming that the NPP demonized the NDC for introducing the levy tagging it as “nuisance” but instead of scrapping it they are rather leveraging it.

“If you recall in 2015, we had introduced a bill to Parliament; that bill was informed by the restructuring that we had done in respect of the loans that the energy sector was owing. And the aim was to find a way by which the people of Ghana could contribute over a period of three to four years to enable us clear the debt. Now this resulted in us having to pass the energy levy bill which became an Act. And you do recall that at the time the NPP vehemently rejected the energy sector levy calling it several names like nuisance tax among others. They said it was as a result of that tax that electricity bills were now higher than rent.”

“But we hear from this government that they intend to raise a $2.4 billion bond over 15 years so that they will use this energy sector levy to pay for the 15 years. This is shocking,” he said.

When asked where he got his information from the MP said “this is public knowledge” adding that the Finance Ministry had advertised it in the media as well as on its website.

“Recently, the Ministry of Finance advertised transaction advisers to be shortlisted and contracted to engage in this transaction for government. This is public knowledge. If you go to the Ministry of Finance’s own website, it is there. And the transaction adviser is to help them to raise $2.5 billion over 15 years.”

I’m not aware of energy sector levy as collateral

But the Chairman of  the Mines and Energy Committee in Parliament, Emmanuel Akwasi Gyamfi, who could not confirm the development on Eyewitness News, said government instead intends to issue the bond to clear the energy sector debt which he said was about $2.4 billion.

“I cannot confirm that we are going to use the energy sector levy as collateral for this bond. I’ve not been involved in any of these negotiations…What I can confirm is that, government has intention of taking off that load of 2.4 billion dollars from the energy sector so that we can create a clean sheet for the effective running of the energy sector.”

When asked how government intends to do this, Akwasi Gyamfi said they intend to issue a bond to defray the debt.

Government on June 15, 2017, appointed Fidelity bank and Standard Chartered bank as lead managers for the issuance of the Energy Sector Levy Act (ESLA) bond.

The banks are expected to raise GHS10 billion.

A press statement issued by the Ministry of Finance and copied to Citi Business News, said “ESLA SPV is expected to issue bond(s) to the tune of about GH¢10 billion, being the total estimated legacy debt within the energy sector.”

“A portion of the bond proceeds shall also be used to refinance previously restructured debt due Banks that are currently being repaid with ESLA receivables, as well as the BDC debt due the Banks,” it added.

The proceeds will be used to repay the legacy debt of the energy sector SOEs, in line with the strategy as stated in paragraph 805 of the 2017 Budget Statement and Economic Policy of Government, to streamline the ESLA flows.

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(Via: CitiFM Online Ghana)