The Ghana Bankers Association has appealed to power companies to abide by rules governing the Escrow Account with the Bank of Ghana (BoG) to prevent a future Legacy Debt in the power sector.
The Escrow Account was created as part of the Petroleum Levy Law passed as an act of parliament to help government clear debts accrued by the Volta River Authority (VRA) and the Electricity Company of Ghana (ECG).
Currently, the account is said to hold about 250 million cedis.
Speaking to Citi Business News in an interview, the President of the Ghana Bankers Association Alhassan Andani maintained that the Escrow Account will also prevent banks from giving funds to power companies without a prepared plan to refinance the loan in a stipulated period.
“I think the Escrow Account process is probably the best thing because it enables the SOEs to deal with banks in a club or a syndicated arrangement,” he said.
By this, Mr. Andani explained that the laws governing the account will define how power companies can access funds to prevent the banks from overruns.
“The SOEs will have a clear view of what is tolerable in terms of debt service and therefore you are not all sitting in your little corners expecting different things which don’t happen,” he said.
He stated that the law will also allow all the power companies to make inputs into the account to enhance checks on how funds can be withdrawn to undertake projects.
According to him, this particular provision will prevent the situation where some power companies individually go for loans without the prior approval of government, resulting in legacy debts that must be refinanced by government.
“So you have one Escrow Account, everybody has a view on it and out of debt service what else is left to run the company,” he said.
Mr. Andani maintained that the law will strengthen the power sector and avert loans that will later be paid by the Ghanaian taxpayer.
“It’s probably the best introduction and to the extent that we can manage it properly that will be the best,” he said.
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