President Mahama justifies GH¢1 petroleum Levy

President John Dramani Mahama has justified Parliament’s approval of an amendment to the Energy Sector Levies Act (ESLA)  bringing in GH¢1 levy increase for energy development.

“This decision, though difficult, is necessary and justifiable,” President Mahama declared when he officially accepted the final report of the National Economic Dialogue from Dr Ishmael Yamson at the Presidency, in Accra. President Mahama said the expected revenue gain was $5.7 billion cedis yearly.

This revenue, he said, would be directly referenced to pay legacy energy debt, finance current fuel purchases, and  prevent the possibility of recurring power shortages.

The President said Funds from this levy would be free from the hazards of the Consolidated Fund. He said the Fund would be continuously audited and audit reports made public to promote openness in its utilization.

President Mahama said while in the beginning much of this revenue would go into the buying of fuel to promote a stable supply of electricity, with the current developments in the upstream sector, they expect to receive more gas from ENI, Sankofa, and Jubilee and TEN fields.

He stated that “We are aware of the burden this will place on households and businesses, but I want to assure Ghanaians that this decision was not taken lightly.” Discussing about the National Economic Dialogue, President Mahama said the dialogue recognised growing energy sector liabilities as the greatest existential threat to fiscal consolidation and macroeconomic stability.

President Mahama said “Our energy sector carries a debt burden of over $3.1 billion, with an estimated $1.8 billion more required to finance fuel procurements for uninterrupted thermal power generation in the coming months.”

He expressed with the full assurance of supply of more gas through the West Africa Gas Pipeline, they expected to substantially reduce the use of liquid fuels in the nation’s energy mix.

During that stage, the resources generated by this increased levy will be channeled to pay down accumulated legacy debts in the power sector,” the President said. President Mahama explained that with the recent gains in macro stability and strengthening of the Ghanaian city, the levy was not expected to result in any immediate fuel price increases at the pump.

He drew to attention that if not dealt with the situation will be a burden to national productivity and industrial growth. He again said “While we have devised a strategy to liquidate this debt and staunch the bleeding in the power sector, we must take advantage of recent gains created by appreciation in the value of our currency to accelerate the solution to our energy sector challenges.”

In addition, he said, the Government would continue working to improve operational efficiencies in the energy procurement and distribution sectors, while tailoring support programs for vulnerable groups, as well as restructuring tax policies for prosperity and justice. He said another central recommendation of the dialogue was to improve Ghana’s complex and inefficient tax structures, which had become both a hindrance to investment and a problem the citizens.