A loan worth 60 million dollars being procured by the government of Ghana for the Electricity Company of Ghana has left Parliament divided again.
The loan is to upgrade the distribution network of Ghana’s power distributor but the opposition in Parliament insists the terms and condition of the facility are too costly for a ‘broke’ ECG.
Joy News’ Parliamentary Correspondent Elton John Brobbey reports that the loan being procured from the International Development Association comes with an interest rate of 1.25% and a service charge of 0.75% as well as some charges.
Government is expected to pay back the loan within a 25-year span.
However, after procuring the loan from the provider, government will on-lend to the ECG at an interest rate of 5% to be paid back in 17 years.
This the minority believes is untenable. Old Tafo MP and former Minister of State at the Finance Ministry under the Kufuor regime Dr Anthony Akoto Osei said the on-lending conditions government has introduced makes it an unsustainable loan for ECG to procure.
“The interest is too onerous, 5% is too commercial…is government now a commercial bank?” he asked, adding ECG is broke” and granting it that loan will sink it.
He wondered why the government will adopt such a strategy to procure loans to an already debt stressed institution.
He said the ECG is already saddled with huge debt and a new loan will plunge the company in dire crisis.
But the majority disagrees. Tamale South MP Haruna Iddrisu believes the time has come for institutions like the ECG to demonstrate their ability to pay for loans procured for them.
He said there is a new debt management strategy government has put in place which makes it possible for public institutions to borrow on their own strength.
He suggested the period when government borrowed monies for institutions like the Ghana Water Company, ECG and other institutions only for the government to pay back those loans had long gone.
“ECG must demonstrate that they are capable of repaying the loan,” Haruna Iddrisu said.
He opted for a compromised position of 20 years for ECG to pay back the loan.
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