As the general public debate of the imposition of the brand new Vitality Sector Amended Levy continues to rage after Parliament authorized the invoice earlier this week, Dr Richard Danso, founder and Chief Government of the Alliance for Growth & Industrialisation, (ADI) has waded into the difficulty, declaring his full assist for the brand new tax within the gentle of the monetary predicament which the President Mahama administration has inherited and its implications if not resolved.
The brand new levy, handed into regulation on Tuesday, June 3, introduces a GHc1 levy on each litre of petroleum merchandise offered in Ghana. The purpose is to generate an extra focused GHc5.7 billion in revenues in direction of retiring the power sector’s complete indebtedness, which stood at US$3.1 billion as of March 2025.
Finance Minister, Dr Cassiel Ato Forson, defined {that a} minimal of US$3.7 billion is required to retire the debt, which continues to rise, whereas an extra US$1.2 billion will likely be wanted to make sure the continual provide of gas to Ghana’s thermal energy vegetation all through this yr.
Dr Danso identified that paying a GHc1 levy on every litre of petroleum merchandise out of the efficient financial savings of some GHc4 per litre given customers by the sharp appreciation of the cedi towards the greenback over the previous two months is an reasonably priced worth to pay for the assure of sustained 24-hour electrical energy provide, which might not occur if the debt isn’t paid off and corporations alongside the ability provide chain are unable to stay in operation producing and distributing electrical energy.
“All of the potential financial features we are actually trying ahead to as a rustic are depending on our having the ability to drive our financial actions,” Dr Danso asserted in Accra within the wake of the brand new levy’s Parliamentary approval.
“With out secure electrical energy, the economic system can’t generate the employment that our youth particularly so direly want and the economic system as an entire will be unable to extend the productiveness that’s requisite if Ghana’s financial efficiency is to enhance on a sustainable foundation”, he added.
He additional identified that with out common electrical energy,, Ghana can’t produce cost-competitive exports for the worldwide market, which might jeopardize the cedi’s alternate price towards the greenback, which in flip would finally eradicate the cedi’s latest appreciation and the ensuing cedi-denominated financial savings customers are having fun with on the worth of petroleum merchandise.
“Actually, that is frequent sense,” Dr Danso has asserted. “The selection is to pay the GHc1 levy on petroleum merchandise as authorities asks us to do or enable the electrical energy sector’s monetary unviability to take us again to ‘dumsor’ after which we might find yourself dropping the financial savings we’re having fun with from the cedi’s appreciation which is 4 occasions the levy.”
Dr Danso additionally stated that Ghanaians ought to give their authorities the advantage of the doubt as regards to its promise to re- fence the revenues generated by the brand new levy and dedicate all of them to the said goal of paying down the power sector legacy debt.
“Certainly, one fear that Ghanaians have expressed pertains to the failure of previous efforts to defray power sector monetary shortfalls. They level out that ESLA was launched in 2015 with the promise that it will defray the then power debt in 5 years after which the levy can be terminated. A decade later nonetheless, it’s nonetheless being levied however the power sector debt has risen additional reasonably than fallen”, he talked about.
Nonetheless, the incumbent authorities has defined that the predecessor administration imprudently diverted the levy’s proceeds into different functions, ensuing within the present incongruous state of affairs.
However, Dr Danso agrees that whereas the brand new levy will serve to defray the monetary hole presently threatening the sustained provide of electrical energy in Ghana, its critics are appropriate of their assertion that it is a stop-gap measure and a extra everlasting decision to the issue of the debt buildup must be discovered.
At the moment, the power sector is troubled by a number of key shortcomings together with a costing construction that doesn’t account for the financing of diesel imports for thermal energy technology, power transmission losses of as much as 40% of energy generated, inefficient billing by the Electrical energy Firm of Ghana and not too long ago unveiled sheer monetary and materials malfeasance inside the state-owned electrical energy retailer in addition to doubtful procurement processes.
Authorities intends to deal with these issues by, amongst different issues, bringing non-public participation into ECG’s metering and payments assortment actions – regardless of push again by sure vested curiosity teams – and a higher reliance on cheaper, cleaner gasoline reasonably than diesel, for thermal electrical energy technology.
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DISCLAIMER: The Views, Feedback, Opinions, Contributions and Statements made by Readers and Contributors on this platform don’t essentially signify the views or coverage of Multimedia Group Restricted.
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