Ethiopian Electric Power’s debt of 191.8 billion birr, which accounts for more than 50 percent of the amount it owes the state-owned Commercial Bank of Ethiopia, has been canceled and the amount added to the capital of the organization. The debt cancellation came following the government’s decision to cancel the debts of development organizations.
As per a four-party agreement among the Ministry of Finance, the Liability and Asset Management Corporation, Commercial Bank of Ethiopia (CBE), and Ethiopian Electric Power (EEP), the whole amount EEP borrowed from the year 2004 to 2016, as well as part of its debt from the year 2017, has been canceled and added to its capital.
However, EEP is expected to pay the remaining debt it owes to the bank.
The debt cancellation relieves EEP from paying a debt of 191.8 billion birr, with interest. Consequently, Ethiopian Electric Power is relieved from paying interests of 17.25 billion birr this budget year, and 18.81 billion birr the coming year. The interest that would have been paid this year alone covers more than 85 percent of the organization’s budget for the year.
The debt cancellation is said to normalize EEP’s balance by converting its debt to capital, thereby empowering the institution for future endeavors.
The newly formed state body, the Liability and Asset Management Corporation, will bear the burden of paying the 191.8 billion birr EEP owes to CBE.
The government has made a decision to relieve state-owned development organizations burdened with debt and set up the Liability and Asset Management Corporation for this purpose. Ethiopian Electric Power, Ethiopian Sugar Corporation, the former Metals and Engineering Corporation (MetEC), Ethiopian Chemical Industry Corporation, and Ethiopian Railway Corporation are among the state-owned organizations listed as beneficiaries of debt relief.
Source: EEP (Facebook, Amharic)
