Finance Minister’s Reason For ¢1 Increment In Energy Debt Levy
Finance Minister Cassiel Ato Forson has adduced reasons for the decision to upwardly adjust the Energy Debt Recovery Levy from GHC 0.49 to GHC 1.49 per litre of fuel.
He presented a Bill to amend the Energy Sector Levies Act, 2025 (Act 1135) which brings into effect the increment projected to rake in about GHC 15 bn this year on June 2, 2025.
According to him, the aim is to raise additional revenue to support the payment of energy sector shortfalls, reduce energy sector legacy debts and stabilise power supply.
As of the end of March 2025 the total energy sector debt wasUS$3.1 billion which encompasses debts owed to independent power producers, State Owned Enterprises and fuel suppliers.
“Due to non-payment of bills owed to ENI and Karpower, the World Bank International Development Association guarantee of five hundred and twelve million United States Dollars and the Ghana National Petroleum Corporation guarantee of one hundred and twenty million United States Dollars were completely drawn down.
“As a result of this, the Government is required to find an additional amount of six hundred and thirty-two million United States Dollars to restore these guarantees. In addition to the above, a minimum of three point seven billion United States Dollars is also needed to clean up the overall energy sector indebtedness.”
He added, “Furthermore, the electricity sector of the country has experienced a significant shift over the years, with the country now heavily reliant on thermal power generation to supplement hydroelectric sources. The cost of liquid fuel to power the thermal power generation plants is not included in the current electricity tariff build-up, resulting in a significant revenue shortfall for the procurement of liquid fuel. According to the Public Utilities Regulatory Commission, inclusion of the cost of liquid fuel in the price-build will lead to an increase in electricity tariffs by over fifty per cent.”
Ato Forson argued that the power sector risks imminent collapse if measures are not taken to cover the shortfalls.
He stated that the levy will serve as a dedicated source of funding to the energy sector and the proceeds will be earmarked for the procurement of liquid fuel for power generation given that the current electricity tariff paid by consumers does not include the cost of fuel used for power generation.
Acknowledging the impact of this on the income of households, he said the strong performance of the Cedi will absorb the shock.
“With this increment, there will be no increase in the ex-pump price of petrol and diesel in the next pricing window beginning today if the levy is increased.”
Source: https://opemsuo.com/author/hajara-fuseini/
