Business News of Thu, 9 Nov 20174
Government blew GHc177 million on ‘failed’ energy bond – Minority
The Minority in Parliament has lambasted the Akufo-Addo government accusing it of blowing GHc177 million on processes that preceded the issuance of the energy sector bond.
According to the Minority spokesperson on Finance, Cassiel Ato Forson, government spent GHc87 million on administrative expenses, as well as GHc400, 000 on the printing of material for the energy bond roadshow.
His latest comment follows a press conference the Minority held on Wednesday where they alleged among others that the bond issue was a failure.
They also at the press conference accused the Akufo-Addo government of causing financial loss to the state and requested that the Finance Minister Ken Ofori-Atta be hauled before Parliament.
Speaking with Citi News’ Parliamentary correspondent, Duke Mensah Opoku, today [Thursday], Ato Forson, who is also the Member of Parliament for the Ajumako-Enyan-Essiam constituency, said the expenditure amounts to reckless spending.
“From the cost that I have that the taxpayer is paying; the state is paying the arrangers, the banks, GHc87.5 million. The state is paying legal fees of GHc700, 000; the state is paying the accountant, GHc350, 000. Surprisingly, the state is paying administrative expenses of GHc80 million. Overall the state is paying GHc177 million. I think this amount is way too much.”
Mr. Ato Forson argued that, when the $1 billion Eurobond was issued under John Mahama’s administration, the amount spent was way lower than what the current administration is spending.
“This is not the first time the state is raising a bond. The last bond we raised under the Eurobond of $1 billion which translates to about GHc4.4 billion, the total cost was under 0.2 percent. Today, we are seeing a bond that we are raising for about 4 billion and the cost is about 1.77 percent.
He further said the Minister of Finance will be hauled before Parliament to give the actual breakdown of expenses for the energy bond since they suspect wrongdoing.
“I think it is important that we ask questions. So the question we are asking is that we want the Ministry of Finance to provide the state with further and better particulars. We are asking for full breakdown of what constituted the administrative expenses. Printing of the road show material was GHc400, 000. We are going to haul the Minister before Parliament, to give us full breakdown to account for every cedi that has been spent so far. We think it is way too much and we smell something fishy,” he added.
Government issued a ten year and seven-year bond with the aim of getting GHc6 billion to offset the legacy debts of the energy sector which was about GHc10 billion, but in all, a total of GHc4.69 billion was realized even after a seven day extension period.
The 7-year component raked in 2.4 billion cedis as targeted, at an interest rate of 19 percent.
However, the 10-year bond failed to hit the 3.6 billion cedis mark.
The Minority at a press conference on Wednesday made a litany of accusations against government, saying several wise counsel was ignored.
They also accused government of breaching the constitution because they did not seek the approval of Parliament before issuing the bond.
Minority presser on energy bond unnecessary, misleading – Kwaku Kwarteng
But a Deputy Minister of Finance, Kwaku Kwarteng, whilst speaking on the Citi Breakfast Show on Thursday, said the press conference organised by the Minority was unnecessary.
“We think that this press conference was completely unnecessary, bad taste and misinformed,” he added.
Energy bond struggled due to low-interest rate – Finance Ministry
He however clarified that government’s failure to achieve its targeted GHc10 billion lump sum after issuing the bond, was largely because investors considered the interest rate unfavourable.
Mr. Kwaku Kwarteng noted that investors were not happy with the 19% promised them, and had asked for more, but government was not willing to offer anything beyond 20%.