Gov't issued bond and stocks to pay TOR debt-Duffuor

Dr. Kwabena Duffuor, Minister of Finance and Economic Planning, on Thursday said government issued a three-year bond for GH¢445.0 million in March 2010 for the partial settlement of the 1 billion cedi debt the Tema Oil Refinery owed Ghana Commercial Bank (GCB) in 2009.

He said in April 2011, government again issued a three-year stock certificate to the bank for the remaining GH¢572 million following an agreement reached between the bank and government.

Dr. Duffuor was answering questions on the floor of Parliament tabled by Mr. Kwaku Agyeman-Manu, NPP Member of Parliament for Dormaa West.

He said, “We did not come to the House for approval because the issue of the bonds was part of the Net Domestic Financing of 2010 Budget which has already been approved”.

Dr. Duffuor said the debt had serious implications for both TOR and the bank because the debt was not being serviced. It had become a huge non-performing asset in the balance sheet of the bank and was weakening the balance sheet of TOR.

He said the securitisation exercise involved the transformation of non-performing asset in the books of GCB into an asset that could generate some interest to improve GCB’s balance sheet.

The Finance Minister said the transactions were taken to reduce the risk associated with GCB’s over exposure to TOR, while at the same time cleaning the balance sheet of TOR to enable it transact business on the strength of its own balance sheet.**