Government to lose GH¢308.30million due to reduction of energy sector levies

he government is expected to lose an estimated GH? 308.30 million in revenue as a result of the reduction in the Energy Sector Levies.

Out of this amount, GH¢185.28 million and GH¢123.01 million are estimated National Electrification Scheme Levy (NESL) and Public Lighting Levy (PLL), respectively.

These losses will be accounted for under the Power Generation and Infrastructure Support Sub-Account (PGISS).

In effect, the 60 per cent of monies collected under the NESL and 40 per cent of monies collected under the PLL that is normally paid into the PGISS will no longer be available.

This was contained in the Parliamentary Select Committee on Finance’s report on the Energy Sector Levies Amendment Bill, 2017.

New Bill

The government as part of the 2017 budget statement and economic policy proposed to reduce the NESL from five per cent to two per cent and the PLL from five per cent to three per cent per price of kWh of electricity charged on all categories of consumers.

Pursuant to that commitment, the government introduced a bill to amend the Energy Sector Levies Act, 2015 (ACT 899) as part of measures to reduce the energy sector levies imposed on consumers.

Observations

The committee also observed that the reduction in the rates will not have any impact on the current obligations under debt restructuring.

It also observed that in the budget statement, the reduction in the rates had been inadvertently stated as three per cent for NESL and two per cent for the PLL.

The committee pointed out that officials from the Finance Ministry admitted that this was indeed an error of transposition and that the true intent of the government policy was to reduce the NESL to two per cent and the PLL to three per cent as captured in the Bill.

Energy Sector Levy Act

The Energy Sector Levy Act, which was passed in December 2015, received lots of criticisms as fuel prices at the pumps went up as high as 27 per cent.

The Act was introduced as part of measures of generating revenue to offset the monies that the Volta River Authority owed to banks and some accumulated debts within the country’s energy sector and make the energy companies viable.

The Act placed taxes on some petroleum products and saw the introduction of the energy debt recovery levy and the price stabilisation and recovery levy.

In addition, the road fund and the energy fund were revised upwards.

Meanwhile, the TOR debt recovery levy, the cross-subsidy levy and the exploration levy were withdrawn.