$60m loan facility approved for ECG

The Electricity Company of Ghana is being supported with a US$60 million loan facility, to enable it to reduce its unplanned distribution line outages and commercial losses.

The facility, an additional funding agreement between the government and the International Development Association (IDA), is to support the Ghana Energy Development and Access Point Project

The government will on-lend the amount to the ECG to enable it to undertake the project. The facility was approved by Parliament yesterday.

According to a report by the Joint Committee on Finance, Mines and Energy, the facility between government and IDA has an interest rate of 1.25 per cent per annum and a service charge of 0.7 per cent per annum.

The report said the facility also had commitment charge of 0.5 per cent per annum, grace period of five years,and with a repayment period of 25 years.

With the on-lending agreement between the government and ECG, the electricity company will pay an interest rate of 5.3 per cent per annum, service charge of 0.75 per annum, commitment charge of 0.5 per annum, with a grace period and repayment period of five years and 17 years, respectively.

The report said the project to be implemented within a period of 24 months, would improve revenue collection and enhance ECG’s efficiency.

The Majority Leader, Mr Alban Bagbin, contributing to the debate, supported the motion for the approval of the facility, and added that the on-lending facility would assist the ECG to improve its operations.

The Deputy Minister of Finance, Mrs. Monah Quartey, indicated that the GEDAP would improve ECG’s infrastructure, reduce commercial losses and make ECG more efficient.

She was optimistic that the decision to privatise ECG would further place it in a better position to service the loan.

However, members on the Minority side of the House raised concerns over ECG’s ability to repay the loan.

The Minority Spokesperson on Finance, Dr. Anthony Akoto-Osei, said the terms for the on-lending facility for the ECG were too high, because the balance sheet of the company was not sound enough to repay the facility, and urged the government to review the terms of the agreement downwards.

The Minority Leader, Osei Kyei-Mensah-Bonsu, said the ECG would be well positioned to borrow on the account of its own books if the government settled its indebtedness to the ECG.

In another development, the Right to Information Bill was taken through the Consideration Stage.

It is expected to be passed before the expiration of the current Parliament in the next two months.

 

By Yaw Kyei

 

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