GHANA’S ENERGY MINISTER CONCERNED OVER USING GNPC TO GUARANTEE DEBT OF OTHER ENTITIES

ACCRA, Energy Minister Boakye Kyeremateng Agyarko has expressed concern over past practices in which the Ghana National Petroleum Corporation (GNPC) has been used as the cash-cow to support other government entities.

This is not a healthy practice because the co-mingling of assets from different entities raises certain contingent liabilities that may not be easily addressed legally, Agyarko told Parliament’s Public Account Committee (PAC) Monday when responding to some infractions contained in the 2015 Auditor-General’s Report in relation to the Ministry of Energy.

The PAC is currently holding public sittings on the Auditor-General’s Report for the year ended 31st December, 2015.

Agyarko also stated that because the GNPC had a solid balance sheet, it was leveraged to support other government entities by providing either guarantees or limited liquidities for specific purposes. He cited as an example the Electric Company of Ghana Limited (ECG) which could not raise guarantees for some of the emergency power plants and had to resort to GNPC’s balance sheet.

The Minister advocated the nation stay away from cross-leveraging GNPC, since the balance sheets are now autonomous in their entities. In situations where the government needed funding, there was a need for the transaction to be properly structured as a financial transaction rather than as instruction to leverage, he added.

He said if the energy sector had to perform collateralisation or leveraging, there ought to be proper security and liquidity documents that specifically set out the objective and the retirement period.

Agyarko stressed the need to develop a situation where each government entity would stand on its own, and finance its own activities so that the government could determine the viability of each entity without cross-subsidisation and cross-leveraging.

Source: NAM NEWS NETWORK

   

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