Shortfall in energy bond shows lack of investor confidence – Minority

Mr Casiel Ato ForsonThe Minority in Parliament has attributed the under subscription of Ghana’s energy sector bond to what they said is the waning confidence of investors in the Ghanaian economy.


Government announced the issuance of the GH¢2.4 billion seven-year bond and GH¢3.6 billion ten-year bond but could only raise GH¢1.5 billion for the seven-year bond and GH¢760 million in the ten-year bond.


After extending the closing date for the bond for about a week, it was able to realise the GH¢2.4 billion seven-year bond but fell short of the GH¢3.6 billion ten-year bond managing to accrue only GH¢2.2 billion.


This, the Minority caucus said is a “clear lack of confidence of investors in the economy and its handlers.”


At a press conference addressed by Casiel Ato Forson, the Ranking Member on the Finance Committee in Parliament yesterday in Accra, the caucus said “this singular failure of bonds issuance in this administration has brought Ghana’s image and integrity into disrepute.”


According to the Minority caucus, this is the first time Ghana’s bond was under subscribed, a situation they said indicates that things were getting out of the hands of the government.


Doing a postmortem of the situation, the Minority said one of the reasons for the failure of the government to realise the targeted amount was as a result of unrealistic assumptions.


Mr Forson explained that between 2012 and 2016, the consumption of various petroleum products increased significantly reaching 3.36 million metric tonnes because of the electricity shortages.


He said after power was normalised, total consumption for the first half of 2017 stood at 1.4 million metric tonnes and is expected to reach 2.96 million metric tonnes by end of year, saying that government wrongly projected the usage of petroleum products (petrol) to increase by 3.58 and gasoline 1.9 per cent.


“The projected consumptions are grossly overestimated and any analyst who understands the Ghanaian economy will find this assumption unrealistic and may not have much confidence and interest in the bond.”


On inability of government to meet the debt service coverage ratio, Mr Forson said investors were of the opinion that government’s ability to service the loan was low making it “risky” for investors to partake in the bond purchase.


In the view of the Minority, using the Energy Sector Levies Act (ESLA) of Parliament which could be amended by the next government, as the special purpose vehicle which has no track record and unknown to the investment world was confusing.


They castigated the Akufo-Addo-led administration for criminalising the ESLA whiles in opposition and vowed to scrap it only for it to use same ESLA to go sourcing for funds.


Mr Forson said using ESLA and with the government forming a public limited liability company using tax revenue approved by Parliament and without bringing the bond deal to the House for approval was a clear breach of Ghanaian law.


The Minority contended that by not going into the financial market on the strength of Government of Ghana ratings rather than the ESLA, the state could have saved two per cent of GH¢6 billion times ten years, pointing accusing fingers at the managers of the economy for causing financial loss to the state.


Mr Forson, MP, Ejumako-Enyan-Essiam constituency, hinted that they will summon the Finance Minister before the House for questioning and demanded an apology from him.




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