Government has cancelled more than GH¢58 million debts owed it by the three major state-owned utility companies under the Heavily Indebted Poor Country (HIPC) Relief package.
The Volta River Authority (VRA), Electricity Company of Ghana (ECG) and the Ghana Water Company limited (GWCL) are indebted to government as a result of long-term loans that were secured for them to improve on their operations.
The government has cancelled GH¢32 million of the VRA's total debt, leaving GH¢165 million outstanding, while the ECG has had GH¢14 million of its debt cancelled with about GH¢44 million remaining. An amount of GH¢12 million of GWCL's debt has been written-off, leaving a remainder of about GH¢76 million.
This brings the total debts outstanding to about GH¢286 million.
The Chief Director at the Ministry of Finance and Economic Planning, Nana Juaben-Boaten Siriboe, explained to B&FT that the government has cancelled the debts with the expectation that the three companies will continue to pursue realistic and implementable measures to further improve their finances and forestall liabilities accumulation.
The VRA was also a beneficiary of the US$750 euro-bond money that the government raised from the international capital markets in February this year, whenUS$192.5 million of the euro¬bond money was injected into the operations of the VRA to enable the Authority purchase crude oil for powering the emergency generating-plants it brought into the country during the energy crisis last year.
"We have therefore decided to provide support to these companies through the cancellation of their indebtedness to government, under the HIPC Relief Initiative for 2007," he said.
B&FT enquiries at the Finance Ministry have revealed that a consultant has also been appointed to assist the companies on how they would improve on their financial positions.
Other measures that are being taken to improve on the finances of the companies are through tariff adjustments of heavy energy consumers, such as the mining and steel milling firms to ensure that the VRA and ECG recover the cost of producing and distributing energy.
Inadequate tariffs that do not guarantee full cost recovery and the ECG's inability to attain 100 percent revenue collection have helped to weaken the financial position of VRA.
