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, the 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 the press in Parliament yesterday, Ato Forson, who is also the Member of Parliament (MP) 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.”
He 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, would 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 the press conference 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.
The full details of the statement are as follows;
PRESS STATEMENT ON SCANDALOUS GHC 177 MILLION PAYMENT FOR FAILED BOND
The Minority in Parliament, has learned with outrage, the hugely inflated expenditure incurred in the issuance of the failed Energy Bond. Information available in the Bond prospectus indicates that a colossal GHc 177,241,976 million was spent on the programme expenses. A breakdown of the expenses is as follows:
|Item||Amount in GHS||% of Programme|
|GSE Application Fee||1,600,000||0.02|
|GSE Listing Fee||800,000||0.01|
The expenditures above are nothing short of scandalous. We note that only about GHs 700 million of cash was raised during the bond issuance. The remaining GHs 4 billion was issued in a swap deal with banks which held the energy sector debt.
This means that government merely paid back the debts owed them albeit over a staggered period equivalent to the duration of the 7 and 10 year bonds. A swap deal is done almost for free hence cannot be considered to have been part of the cost.
This also means that the Finance Minister and his team have paid GHs 177,241,976 for just about GHs 700 million representing over 25% of total monies realised.
Even more alarming are parts of the breakdown of the programme cost which shows that an astronomical GHs 80 million was spent on “administrative expenses” which essentially covers air tickets, hotel accommodation, per diems and other such expenses. We are unable to come to terms with how such huge amounts could be spent on the team that floated this bond especially given the embarrassing failure that they encountered.
When set aside the expenditures incurred during the floatation of bonds under the NDC government, we notice a wide and unacceptable disparity which can only be the result of massive inflation of costs.We demand an immediate enquiry into this scandalous affair and a detailed explanation from the Finance Minister over how these expenditures were incurred.
We also demand a detailed breakdown of all the costs involved particularly the administrative expenses and how the arranger’s fees were disbursed.
Cassiel Ato Forson
Ranking Member on the Finance Committee and Spokesperson