Government begins payment of energy sector debts

Government has made the first tranche of payment to clear part of the debts owed by Volta River Authority (VRA) to the commercial banks.

The Finance Minister, Seth Teckpe disclosed this Wednesday at a news conference to give an update on the payment of the debts.

The GH¢250 million payment was said to have been made into a separate account at the Bank of Ghana (BoG) on August 31.

The payment is part of a GH¢4.4 billion of VRA's debt which will be paid over a five-year period according to government,

The arraignment with the Banks has been done in such that everyone would also see, the interest to be paid on the Ghanaian component of the debts reduced to 22 percent from 30 percent, whiles the interest of the dollar component has also been reduced to 11 percent to 8.50 percent.

Payments will also be funded from a debt service account which will receive cash flows from energy debt recovery levy and a debt service reserve and also proportion of VRA's receivables.

Even though government was silent on the current TOR debts, there is also a plan to institute an arraignment, that could see Government issued a 10-year bond to pay the TOR debts, which will be arraigned by four banks.

However on the Bulk Oil Distributors, government maintained that, it is still working to established the true state of the debts.

President of Ghana Association of Bankers Alhassan Andani tells JOYBUSINESS the arraignment has the full backing of the Association, adding that disbursing of the first payment will start from Thursday, September 1.

Chief Executive of the Volta River Authority Kirk Cofie is optimistic, the deal will put the state power generating firm on the strong footing going forward .

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