Gov’t Clears $300m Of Legacy Debt

GOVERNMENT PAID $300 million of outstanding legacy debt to Bulk Oil Distribution Companies (BDCs) between 2017 and June 2019.

A total of $49.77 million outstanding debt is expected to be paid by end of 2019.

These were contained in the 2018 Industry Report of the Chamber of Bulk Oil Distributors (CBOD).

This brings to $930 million subsidies incurred by government through its subsidy policy from 2012 to date.

The outstanding claims at the end of 2018 comprised Real Value Factor (RVF) and Forex Loss Under Recoveries Interest (FLURI) claims.

Real Value Factor refers to the financial cost (interest) incurred by BDCs for the delayed payments of price under recoveries.

Forex Loss Under Recoveries Interest on the other hand, refers to the financial cost borne by BDCs for the delayed payment of Forex Loss Under Recovery (FLUR) by government.

According to the report, Legacy Bonds Limited, an assignee of the BDC claims, negotiated and finalised the parameters/terms for establishing the FLURI and RVF claims with government.

It said in June 2019, government through the Ministry of Finance (MoF) issued a 10-year ESLA bond of GH¢648.93mn to fully settle the validated RVF claims and partially settle the FLURI claims.

The ESLA account at the end of 2018 recorded a closing balance of GH¢615.42 million.

ESLA Plc had issued bonds with a face value of GH¢5.6 billion (GH¢5,664.72 million) as of December 2018, as part of the government’s plan to refinance Energy Sector debts.

The issuance of the bonds resulted in the reduction of State-Owned Enterprise (SOE) debts to its creditors by approximately GH¢5.4 billion (GH¢5,453.20 million) as of end 2018.

Total transfers from the ESLA accounts towards the servicing of the ESLA bonds amounted to GH¢1.3 billion (GH¢1,353.71 million).

The 2018 Annual Report on the Management of the Energy Sector Levies and Accounts, indicates that for 2019, a total of GH¢3,947.82 million has been targeted for collection under the Energy Sector Levy Act, (ESLA).

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