The Government of Ghana has projected a modest growth outlook for energy sector levies by 12.0 percent within the next five years, so as to contribute to the reduction in financing challenges facing the Energy Sector, according to the 2020 ESLA report.

Specifically, the projection for 2021 is estimated to increase by GHS634.77 million (12.0 percent). This is expected to support the Road Fund and Energy Commission in delivering on their mandate, the report indicates.

The outlook is hinged on the waning impact of the COVID-19 pandemic, while also accounting for the introduction of new levies under the 2021 budget statement that broadly feeds into the ESLA account.

Meanwhile, the debts on the books of State Owned Entreprises (SOEs) operating within the Energy Sector, for which reason the levies were instituted continue unabated. Although the levies have largely reduced hard-core liabilities or legacy debts within the sector, it continues to accumulate notoriously huge debts. Thus, threatening the ability of the sector to assume a very formidable growth trajectory and in very specific ways affecting the overall growth of the economy.

Challenges facing the Energy Sector

That notwithstanding, the sector’s problems are associated with political interferences, without neglecting the inefficiencies in the performance of the SOEs operating within the Energy Sector. Analysts are of the view that the sector will be better-off without political interference and deals that do not satisfy the interest of the country.

For the past five years (2016-2020), total levies collected amounted to GHS17.54 billion out of a programmed collection GHS18.54 billion. The shortfall in collection of an excess of GHS834.58 million is attributed to the withdrawal and/or reduction in the Price Stabilization and Recovery Levy (PSRL) to cushion consumers against paying higher prices for petroleum products at the pumps. The ESLA report also highlights, that is owing to the lower recovery of electricity bills by the Electricity Distribution Companies (EDCs).

Additionally, proceeds from the Petroleum levies under the ESLA were utilised for power sector infrastructure support, road maintenance and repayment of loans contracted by the Road Fund. Other supports went for fisher folks and industries through the provision of subsidies on Premix and Residual Fuel Oil. It also included funds for the activities of the Energy Commission.

Also, proceeds from the electricity levies were utilised to modernise electricity infrastructure in the newly created regional capitals and increase access to affordable and sustainable electricity, the report highlights.

Five-year projection of the Energy Sector Levies

Considerably, ESLA proceeds amounted to GHS2.74 billion as of year-end 2020. Latest data provided by the Bank of Ghana for Q1 2021 indicates a total accumulation of GHS533.31 million, GHS87.03 million lower than Q1 2020 figures.

The Energy Debt Recovery Levy (EDRL) amounted to GHS2.03 billion at year-end 2020, Public Lighting Levy (PLL) was GHS132.47 million, National Electrification Scheme Levy (NESL) also amounted to GHS91.67 million, whereas the Price Stabilization and Recovery Levy amounted to GHS482.68 million.

Based on the Government’s forecast data, total levies will increase from GHS5.3 billion in 2021 to GHS7.43 billion in 2024. Considering the specific levies- petroleum levies (EDRL, PSRL, Road Fund, Energy Fund) will reach GHS4.93 billion in 2021 and then subsequently accumulate to GHS7 billion in 2024.

More so, Electricity Levies, consisting of Public Lighting Levy and National Electrification Scheme Levy is projected at GHS344.85 million at year-end 2021 and will gradually accumulate to GHS428.80 million at year-end 2024.