Remove taxes and levies to make electricity affordable – CIPDiB CEO

Mr Elikplim Kwabla Apetorgbor, the Chief Executive Officer (CEO) of the Chamber of Independent Power Producers, Bulk Consumers and Distributors (CIPDiB), Ghana, has called for the removal of what he described as inessential taxes contributing to high electricity tariffs.

He mentioned the taxes as Ghana Education Trust Fund (2.5 per cent), the National Health Insurance Levy (2.5 per cent), the Value Added Tax (12.5 per cent), the Public Lighting – Street lighting (3 per cent) and the National Electrification (2 per cent).

Mr Apetorgbor in a statement signed and copied to the Ghana News Agency in Accra on Saturday said, the levies and charges inconvenienced and burdened consumers and weakened the capacity for growth as a nation and made distribution companies uncompetitive.

He said the complete removal of these taxes and a reduction in gas price would make Ghana’s position as one of the benchmarks in the sub-region and bring visible economic relief to the country,” he said.

Mr Apetorgbor said End User Electricity Tariff across the West African sub-region was a major concern and one of the capital reasons for the stagnated industry growth.

He said the subject required an objective political study of the cost of electricity generation, transmission and distribution by conducting an analysis of variance, and benchmarking the most competitive economies in the sub region or the world.

The CEO in the statement said, power distribution companies, the Electricity Company of Ghana, Northern Electricity Distribution Company and Enclip Power Company procure power in bulk from generators, ‘Independent Power Producers and the Volta River Authority’ through transmission service providers, Ghana Grid Company Limited (GRIDCo) and deliver to consumers.

“Power is in most cases delivered to end users at the voltage at which it is usable, hence the Distribution Value Added (DVA). The power distributors provide metering, billing and information services to the consumers therefore, the end user tariff is equal to Bulk Generation Charge, Transmission Service Charge (TSC), Distribution Service Charge (DSC) or DVA.



Mr Apetorgbor said, the weighted average of approved maximum charge for procurement of capacity and energy that distribution companies shall be allowed to recover from customers.

He said TSC is the price charged by GRIDCo for the use of transmission network by the Distribution companies and Bulk customers,, while, DSC is the price paid by consumers to the distributor for the supply of electrical power which presently was the addition of about 22.5 per cent statutory levies and charges to the end user tariff, adding, this add-ons contribute significantly to the expensive electricity tariff consumers’ talk about.

“For us to see an evidence based industry growth, we must, as a necessity, remove the Maximum Demand Charge and Power Factor Surcharges from the tariff applicable to industries and bulk consumers. The effect should translate into drastic reduction in the cost of production, prices of goods and services and eventually trigger the utilization of any ‘idle capacity’.

“When by the Grace of God the country is out of the clutches of COVID-19 and begins efforts at revitalizing the economy, we must do so on the premise that industries require cheaper power for growth and job creation, all of which translate into tax earnings for the country,” Mr Apetorgbor said.

He further added that after COVID-19, the country would require strategic interventions and workable solutions to quickly bring the economy to a sound footing and that this must not be business as usual, adding that, “We cannot tax ourselves out of the downturn. We must rather engineer deliberate growth at a faster pace to quickly bring relief to our people.

“The actions we take will inform the volume of foreign direct investments we are able to attract. Our policies especially in the energy sector will determine how quickly we recover from this shock,” he said in the statement.