Government seeks transaction advisor for $ 2.5bn energy bond

May 30, 2017

Government through the Finance Ministry, is seeking transaction advisors for its 2.5 billion dollars (10 billion cedis) energy bond to repay legacy debts in the energy sector.

According to government, the move is to put the energy sector back on a strong financial footing as part of comprehensive steps to resolve the sector’s challenges in a sustainable manner.

In an exclusive interview with the Head of the Citi Business News desk, Vivian Kai Lokko on the sidelines of the Spring Meetings in Washington, DC, Vice President Dr. Mahamudu Bawumia was also confident of increased investments to the SoE’s with the complete repayment of the debt.

“There is a 2.4 billion dollar debt that is hanging over the neck of state owned enterprises…What we are going to do is to issue a 15 year long term bond to deal with this debt,” he stated.

Dr. Bawumia added, “What we will do is that we will have one bond which will take off all those liabilities and government will service those bonds with the ESLA revenues. So it is a meter situation that will allow the space for our energy companies to have stronger balance sheets to grow, invest and attract investments.”

A statement by the Bank of Ghana (BoG) on the selection also said the advisor will support the process leading to the issuance of a Cedi denominated long-term bond to refinance the estimated 10 billion cedis debt.
The successful advisor shall among others advise, guide and drive the transaction process as well as structure and document the transaction.
The term of the contract shall be for a period of six (6) months but may be extended based on discretion.

Minority questions ‘delays’

On Monday, the Minority in Parliament raised concerns over the duration of the issuance of the bonds rejecting government’s assertions that there is increased investor confidence following the success of the 2.25 billion dollars domestic bond.

Energy bonds not to increase debt burden

Earlier, the Governor of the Bank of Ghana, Dr. Ernest Addison also told Citi Business News the bond will not add on to the government’s debt which is currently estimated at 127 billion cedis.

“It depends on how it is done if it is issued as a government debt then it will become part of the stock of debt that compute, on the other hand from what I understand it will done through the special purpose vehicle and used the ESLA payment to service that debt, so if that is done then it might not necessary be part of the government”, he explained.

Dr. Addison maintained that it is important for the debt to be cleared to provide some space for the banks.
He was of the view that the bond may rather restructure the debt and give major state owned power companies a clean sheet to invest.


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