President John Dramani Mahama has justified Parliament’s passage of an amendment to the Energy Sector Levies Act (ESLA) introducing a GH¢1 increase in the energy sector recovery levy.
“This decision, though difficult, is necessary and justifiable,” President Mahama stated when he formally received the final report of the National Economic Dialogue from Dr Ishmael Yamson at the Presidency, in Accra.
President Mahama said the additional revenue projected was $5.7 billion cedis annually.
This revenue, he said, would be strictly referenced to pay legacy energy debt, finance ongoing fuel purchases, and avert the risk of recurring power shortages.
The President said Funds from this levy would not be subject to the hazards of the Consolidated Fund.
He said the Fund would be regularly audited and audit reports made public to ensure its transparent use.
President Mahama said while initially much of this revenue would go into the purchase of fuel to ensure a stable supply of electricity, with the ongoing developments in the upstream sector, they expect to receive more gas from ENI, Sankofa, and Jubilee and TEN fields.
He said with the 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.
At 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.
We are fully aware of the burden this will place on households and businesses, but I want to assure Ghanaians that this decision was not taken lightly,” he said.
Touching on 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.
“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 stated.
He noted that if left unaddressed, this situation significantly threatens national productivity and industrial growth.
“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,” President Mahama said.
He said furthermore, the Government would continue working to reduce systemic inefficiencies in the energy procurement and distribution sectors, while enhancing targeted social interventions for vulnerable groups, as well as reforming the tax system for growth and fairness.
He said another central recommendation of the dialogue was to reform Ghana’s overcomplicated, distortionary tax regime, which had become both a disincentive to investment and a burden on the ordinary citizen.
He said accordingly, the Government had moved to repeal four punitive and counterproductive taxes within the first 90 days of this administration, namely the Electronic Transfer Levy, which was known as the E-levy Tax, the Emissions Levy, and the Betting Tax.
He said that they were also undertaking a comprehensive rationalization of the value-added tax (VAT) regime to remove cascading effects and restore predictability and fairness in VAT taxes.
President Mahama said after stakeholder consultation and parliamentary review, these changes would take effect from September 2025.
He said their goal was to have a leaner, simpler, pro-business tax framework that supports growth and compliance.
Dr Ishmael Yamson, the Chairman of the National Economic Dialogue, said they were confident that the President would find their recommendations useful as he leads the resetting Ghana agenda.
He recommended to the President the institutionalisation of the National Economic Dialogue into a permanent consultative mechanism.
Source: GNA
