The Chairman for the Parliamentary Select Committee on Finance and Member of Parliament for New Juaben South, Hon. Dr. Mark Assibey-Yeboah, has indicated that the US$20 million financing agreement between Ghana and the International Development Association (IDA) comes with a favourable terms and conditions, which will help in achieving the objective of the project it’s acquired for.
Presenting the Committee’s report to the House, Dr. Assibey-Yeboah, however, emphasized the need for Parliament to adopt and approve financial agreements that supports government’s effort in improving the Country’s financial sector regulatory framework, especially when it tends to benefit Ghanaians.
Stating that the financing agreement is necessary to support the government’s efforts to improve the financial sector regulatory framework.
Chairman of the Finance Committee, reiterated that the objective of the loan facility aims at supporting the government’s vision of making a broad range of affordable, high quality and formal financial services, as well as products available to Ghanaians.
He disclosed this at the plenary, during the approval of a US$20 million financing agreement between Ghana the IDA to finance the proposed Energy Sector Transformation Initiative Project.
Stating the Minority’s position on the loan facility, Member of Parliament for Sekyere Afram Plains and member of the Parliamentary Select Committee on Finance, Hon. Alex Adomako-Mensah, pointed out that the IDA facilities that come for Parliamentary approval are targeted at technical assistance and capacity building, other than sector development.
Hon. Adomako-Mensah averred that funding from IDA should rather be targeted at projects that support growth, while budgetary funding should be used for capacity building related.
Adding that the Ministry of Finance must streamline the loan facilities to reflect projects targeted at growth in the country.
Terms and Conditions of the loan facility
The loan facility by the International Development Association has 5 years of grace period and 25 years of repayment period. The loan also has a maximum commitment charge of 0.5 percent per annum, a service charge of 0.75 percent per annum and an interest rate of 1.25 percent per annum.
On the grant element of the loan, 33.23 percent is covered.
The project consists of five main components:
The first component covers the Management of Energy Sector Financial Flows with an amount of US$6.3 million.
The activities under this component will assist in addressing the financial viability of the energy sector by improving revenue management at the sectorial level, revenue collection at the utilities level, organisational structures, and strengthening the power companies’ operational and financial management functions.
The second component aims at Sector Planning and Coordination with an amount of US$3.5 million.
The component will assist the government to design effective institutional arrangements with clear mandates for the regulatory institutions.
The third component with an amount of US$3 million, aims at energy access through electrification, strategy for increase access to safe, clean cooking and upgrade of the Northern Energy Development Company (NEDCo).
The fourth component further focuses on supporting the natural gas sector by providing strategy for balancing gas demand and supply, review of the West African Gas Pipeline (WAGP) treaties, and support for capacity building and vocational training.
The amount of money allocated for this component is US$3.2 million
The fifth component deals with project management and is assigned US$2 million.
It aims at supporting the administrative cost of the project including monitoring and evaluation.
There is allotted an amount of US$2 million for contingencies, exchange rate losses or any other related activities.