Fenaka borrows MVR 400m from MIB to pay off mounting debt
The government has guaranteed two loans taken from MIB to provide working capital for Fenaka.
The state-owned electricity and sewerage company, Fenaka, has borrowed MVR 400 million from Maldives Islamic Bank (MIB), the finance ministry has told the parliament.
Details of the loans were shared by the finance ministry at the parliament's public finance committee meeting held on Monday.
According to the details, the government has guaranteed two loans taken from MIB to provide working capital for Fenaka:
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Guaranteed on June 22 and August 27, respectively
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They are two loans of MVR 200 million each
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The loan agreements were signed on June 20 and August 20, respectively
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Repayment period - three years
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Interest rate - 3.5%
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Processing fee - Rs 5.6 million
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Interest payments will cost MVR 12.66 million for each loan
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Estimated total cost of loan repayment - MVR 218 million per loan
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Effective interest rate - 5.10%
Fenaka owes billions of Rufiyaa. Businesses are owed millions and there are many allegations of corruption within Fenaka.
At the end of last year, Fenaka had outstanding debts of MVR 2.22 billion to various parties and the company was in a financially fragile position, according to the financial reports released by the Privatisation and Corporatization Board (PCB), which oversees state-owned companies
Looking at the financial highlights of Fenaka at the end of last year:
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Revenue stood at MVR 2.1 billion while expenditure stood at MVR 2 billion
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Expenditure increased by MVR 1.4 million
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Expenses increased in the areas of staff training, recreation club, staff accommodation and meals
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The company reported a profit of MVR 15.6 million
Speaking in an exclusive interview with Atoll Times' sister publication Dhauru, President Ibrahim Mohamed Solih said in September that Fekana has started paying its debts to STO and private companies.
Asked whether the company would take a loan to pay off the debt of Fenaka, the president said that although the company had not taken any loan at the time, state enterprises would need to borrow for their functioning. The money needed will be obtained in the form of loans, he said.
