Gov’t Rubbishes Minority’s Claims On ESLA Bond

Ken Ofori Atta

The Ministry of Finance has denied claims by the National Democratic Congress (NDC) Minority in Parliament about the recently issued Energy Sector Levy Act (ESLA) backed energy bond.

The Ministry, the ‘sponsor’ of the GH¢10 billion Bond Programme, in a recent press statement, disclosed that the Minority’s statement was fraught with various factual untruths, which appeared to be deliberately spun to allow them to reach their own preferred conclusions.

“First, the claim that the 7-year bond closed at GH¢1.5 billion is not accurate. Published information by E.S.L.A. PLC indicates that the 7-year bond was oversubscribed at GH¢2.53 billion. E.S.L.A. PLC chose to accept GH¢2.4 billion at the cut-off interest rate of 19.0 percent.

“Second, the claim that the 10-year bond was first closed at GH¢760 million again is false. Bids received in the first week amounted to GH¢872 million and not GH¢760 million as claimed by the minority. This information is public and verifiable. Third, the minority claims the 10-year bond after extension closed at GH¢2.2 billion, which was false. Total bids received for the 10-year bond was GH¢2.79 billion of which E.S.L.A. PLC accepted GH¢2.29 billons at an interest rate of 19.5 percent.

“In all E.S.L.A. PLC received bids of GH¢5.32 billion (GH¢2.53 billion for the 7-year and GH¢2.8 billion for the 10-year), representing 89 percent of the targeted amount of GH¢6 billion for the first tranche under the Bond Programme.  E.S.L.A. PLC chose to accept the total amount of GH¢4.70 billion out of a possible GH¢5.32 billion, representing 78 percent of the targeted amount as this was what it preferred within its target price range of 19 percent -19.5 percent. Making a decision based on a cost/yields consideration, is prudent and not a failure. To claim that the issuance was a failure is to be intellectually dishonest, if not mischievous.”

Justifying Assumptions

The minority claimed the projected consumption of petroleum products, used as a basis for projecting ESLA inflows, was unrealistic but the Ministry indicated that this was based on their assumption that monthly fuel consumption was equal throughout the year.

“Historical data on consumption patterns, however, prove that this is a flawed assumption. Fuel consumption in the second half of the year is often higher as a result of increased economic activity and seasonal weather patterns. E.S.L.A. PLC’s projected consumption of petroleum products is accurate and conservative and remains in line with historical patterns.”

Explaining Debt Service Coverage Ratio

“The Minority claims that E.S.L.A. PLC could not meet the Debt Service Coverage Ratio (DSCR) of 1.25 percent but rather scored 1.1 percent DSCR. They arrive at the 1.1 percent by dividing the expected inflows from the Energy Debt Recovery Levy of GH¢1.281 billion by GH¢1.158 billion in total interest payments for both the 7-year and 10-year bonds (i.e. 1.281/1.158 = 1.1)

“The Minority, however, did not recognize the addition of GH¢600 million Government cash support (to be provided on demand) component, as stated in the prospectus, to the GH¢1.28 billion. They also did not add the starting cash of GH¢ 350 million in the Energy Debt Recovery Levy (EDRL) Account. It is instructive to note that the addition of the two missing components in the Minority’s assumptions, gives a total amount of approximately GH¢2.231 billion, making the ratio now 1.926 percent (2.231/1.158). This is far greater than the required 1.25 percent DSCR.

It said the Minority did not fully understand the assumptions underlying the structure, thus failed to do the math right or was just being plainly malicious.


The Ministry congratulated all who supported the groundbreaking transaction.

This is a very successful and landmark transaction- the largest corporate bond issuance in sub-Saharan Africa.

“The Ministry of Finance, under this Government, will continue to pursue measures to assist in resolving the challenges in the Energy Sector that it inherited, including the over GH¢10 billion worth of legacy debts and other obligations, ‘dumsor’, unreliable and intermittent power supply, high tariffs and non-performing loans within the banking sector that is threatening to cripple the banks due to energy sector legacy debts.”

By Samuel Boadi