Government has made the first tranche of payment to clear part of the debts owed by Volta River Authority (VRA) to the commercial banks.

The finance Minister Seth Teckpe disclosed this on Wednesday at a news conference to give an update on the payment of the debts.

The GH¢250 million payment was said to have been made into a separate account at the Bank of Ghana (BoG) Wednesday.

The payment is part of a GH¢4.4 billion of VRA's debt which will be paid over a five-year period.

According to government, the arraignment with the banks has been done in a way that will also see that the interest to be paid on the Ghana component of the debts is reduced to 22 percent from 30 percent while the interest of the dollar component has also been reduced to 11 percent to 8.50 percent. 

Payments will also be funded from a debt service account which will receive a cash flows from an energy debt recovery  levy and a debt service reserve and a proportion of VRA's receivables.

Even though government was silent on the current Tema Oil Refinery (TOR) debts, there is also a plan to institute an arraignment that could see Government issue a 10-year bond to pay the TOR debts, which will be arraigned by four banks. 

However, on the Bulk Oil Distributors, government maintained that it is still working to establish the true state of the debts. 

President of Ghana Association of Bankers, Alhassan Andani tells JOYBUSINESS the arraignment has the full backing of the association, adding that  disbursing of the first payment will start from tomorrow September 1.

Chief Executive of the Volta River Authority, Kirk Cofie, is optimistic, the deal will put the state power generating firm on the strong footing going forward.    

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