ACEP calls on Finance Ministry to submit reports on levy

The Africa Centre for Energy Policy, has called on the Ministry of Finance to comply with the Tema Oil Refinery (TOR) Debt Recovery Fund Levy Act 2003 (Act 642).

This, they should do by submitting to parliament a comprehensive reports on the levy covering 2004 to 2014.

The Centre noted that the Act states that “the Minister shall within three months after the end of each financial year, submit a report on the fund to parliament, but the Minister has over the years failed to submit the report to parliament, which reduces the Minister’s legal and moral authority to continue collecting the levy.

Speaking at a news briefing on the current energy sector levies Act 2015 (Act 899), Dr Mohammed Amin Adam, Executive Director of ACEP said consumers have over paid the TOR debt, explaining that at the time the levy was instituted, the total debt stood at GH?450 million.

He said by 2009, the total debt had grown to GH?900 million due to non-application of the revenues to service the debts as well as interest accumulation.

“Our analysis shows that from 2009 and 2015, the total collection from the levy is in excess of GH? 1.9 billion, which effectively amortises the debt assuming an interest rate of 10 per cent and therefore finds it difficult to comprehend why consumers should continue to pay this debt”, he added.

The Centre over the past two years had campaigned for the abolishing of some levies and margins on petroleum products including TOR debt recovery levy, exploration levy and BOST margin.

Dr Adam commended government for abolishing the exploration levy and the operationalisation of the price stabilization fund to stabilize ex-pump prices to serve as a buffer against price under-recoveries.

He said the Centre had challenges understanding why apart from paying higher electricity tariffs, consumers are asked to pay debts accumulated from inefficiencies on the part of the Volta River Authority (VRA) and the Electricity Company of Ghana.

Dr Adam called on government to audit and publish the true state of the debts of utilities and a legislative instrument providing a sunset clause to determine the exact period over which it would be paid to ensure that the levy meets its objective and does not become like the unending TOR debt recovery levy.

The Centre asked government to introduce private sector participation into the thermal component of a restructured VRA holding company and adopt an open and competitive bidding process to raise the necessary financing for generation projects.

Dr Adam said the application of the special petroleum tax to the levies as is required by law constitutes double taxation and estimated that the double taxation alone would cost the consumer GH? 675 million annually on petrol, diesel and LPG.

He noted that since the Act 899 was passed and various levies applied, there have been different versions of the relative impact of the levies on the ex-pump price of petroleum products where the Minister of Finance told parliament that the effect of the levies would amount to a five per cent increase on the price of petrol, 2.9 per cent for diesel and 1.74 per cent in LPG price.

“Our analysis on the contrary shows that the effects of the levies on ex-pump prices have led to increase in the ex-pump price of petrol per liter by 33 per cent, 40 per cent on diesel per liter and 22 per cent on LPG per kilogram.”