Energy debt now over US$4bn; Minority fears it’ll collapse banks
The country could be in for another round of banks collapse in the near future if the government does not adopt measures to deal with the growing debt situation in the energy sector, the Minority in Parliament has warned.
The minority believed that the energy sector, which is the main source powering the Ghanaian economy, was in dire situation as a result of the failure of the government to honour its payment obligations to players in the industry, especially, those generating electricity.
Addressing a press conference in Parliament on Thursday, June 20, 2019, over the “true state of affairs” of the energy sector, the Minority Spokesperson on Finance, Mr Cassiel Ato Forson, said the country’s rising energy sector debt could trigger a second-round of banking crisis, if no measures were put in place to control the liquidity and operational challenges in the sector.
He said a time would come when the government would not be able to service the energy sector debt because of its compounding nature.
That, he said, would put the independent power producers (IPPs) out of business, a situation which would affect the letter of credit (LCs) provided by the banks, to these companies.
“A time will come when we will not be able to service this energy sector debt because it is compounding on the companies. So, there will be a time that the companies will not be able to shoulder it any longer.
“It will mean that these companies are collapsing. The IPPs will be out of business and dumsor may come back. This will affect economic growth. The banks will end up collapsing again because the LCs are coming from the bank,” he explained.
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Debt of over US$4bn
The Minority Spokesperson on Mines and Energy, Mr Adam Mutawakilu, for his part, said the government was sitting unconcerned for the energy sector to accumulate more debt.
He said, “if one considers the debt portfolio of the energy sector left behind by the then governing National Democratic Congress (NDC) and the measures it put in place to resuscitate and sustain it, it beats our imagination why the sector is still crippled with a debt of over US$4billion.”
He said the indebtedness was affecting the sustainability of the power generating companies and, therefore, called on the government to provide details on how it had utilised or expended the ESLA Funds.