Parliament approves loan facility for ECG
Parliament yesterday approved a $60 million facility to develop infrastructure for the Electricity Company of Ghana (ECG) under the Ghana Energy Development and Access Project (GEDAP).
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The financing agreement is between the government and the International Development Association (IDA).
Parliament also gave approval for an on-lending agreement of $60 million between the government and the ECG for the GEDAP.
The approval followed the presentation of the Joint Committee on Finance and Mines and Energy to Parliament.
Terms of the facility
The $60 million facility has an interest rate of 1.25 per annum, service charge of 0.7 per cent per annum, commitment charge of 0.5 per cent per annum, grace period of five years and a repayment period of 25 years.
On-lending terms
The government is on-lending the $60 million to the ECG at an interest rate of 5.3 per cent per annum, service charge of 0.75 per annum, commitment charge of 0.5 per annum, grace period of five years and a repayment period of 17 years.
Committees
Presenting the report of the Joint Committee on Finance and Mines and Energy, the Chairman of the committee, Mr James Avedzi, said the project was planned to be implemented over 24 months and was expected to scale up the ongoing activities under the first component through an improvement in revenue collection and enhancing the management and planning process of the ECG.
That phase, he said, would focus on the systematic recording and monitoring of consumption by ECG's largest users to protect revenues from sales to large and medium customers.
Minority raised concerns
The MP for Old Tafo and ranking member on the Finance Committee, Dr Anthony Akoto-Osei, said the interest rate of 5.3 per cent per annum and a repayment period of 17 years for the on-lending facility for the ECG were too high because the balance sheet of the ECG was not too good.
He, therefore, requested the Ministry of Finance to review the interest rate and repayments period downwards.
The Minority Leader, Mr Osei Kyei-Mensah-Bonsu, said if the government paid its indebtedness to the ECG, the company would have the financial muscle to borrow "on the accounts of their own books".
He asked the Ministry of Finance to give justification for fixing the repayment period at 17 years.
The Minority, therefore, gave its approval on the condition that the terms of the on-lending facility would be reviewed.
Majority Leader
The Majority Leader, Mr Alban Bagbin, rejected the suggestion that the government owed the ECG, and indicated that it was the state institutions that owed the ECG.
He said the on-lending facility would assist the ECG to improve its operations.
Deputy Finance Minister
A Deputy Minister of Finance, Mrs Monah Quartey, said the project would enhance the infrastructure of the ECG, reduce commercial losses and make ECG more efficient.
She said given that the ECG would go into private partnership, the company would be in a better position to service the loan.