Parliament passes Energy Sector Levies (Amendment) Bill

05.04.17

Parliament last Monday passed the Energy Sector Levies (Amendment) Bill, 2017 to reduce the energy sector levies imposed on consumers.

The Act, which amends the Energy Sector Levies Act, 2015 (Act 899), provides for a reduction in the levies for Public Lighting and the National Electrification Scheme on petroleum products. It reduces the National Electrification Scheme Levy (NESL) from five per cent to two per cent and the Public Lighting Levy (PLL) from five per cent to three per cent per price of kilowatts of electricity charged on all categories of consumers. The passage followed the presentation of the report of the Finance Committee, which recommended the passage of the bill. The Minister of Finance, Mr Ken Ofori-Atta, moved the motion for the passage of the bill.

Fiscal impact

Presenting the report of the Finance Committee of Parliament, its chairman, Dr Mark Assibey-Yeboah, said the committee noted that the reduction in the rates would lead to an estimated revenue loss of GH¢308.30 million. He said of the amount, GH¢185.28 million and GH¢123.02 million were estimated NESL and PLL losses, respectively, to the avowed Generation and Infrastructure Support Sub-Account would no longer be available for payment into that Sub-Account.

Minority's take

The Minority Leader, Mr Haruna Iddrisu, criticised the government for going back on its promise to withdraw the Energy Sector Levy. He said the reduction of the levies would not have a significant impact on the cost of electricity for consumers. Mr Iddrisu cautioned the government against freeing up resources to satisfy a political group. He said the reduction of Petroleum Tax from 17 per cent to 15 per cent and the current reduction in levies would amount to a loss of GH¢1 billion to the fiscal space.

The MP for Yapei/Kusagwu and former Deputy Minister of Power, Mr John Abdulai Jinapor, said the essence of the bill was to bring relief to the industry, but indicated that that was defeated because commercial consumers benefited from only three per cent reduction in the cost of electricity. He indicated that the Value Added Tax (VAT) component was not reduced by even one per cent. Mr Jinapor appealed to the Minister of Finance to consider scrapping VAT on commercial consumers of electricity.

Majority's reaction

The Majority Leader, Mr Osei Kyei-Mensah-Bonsu, said the bill intended to bring some relief to Ghanaians. He denied the suggestion that the reduction of the Petroleum Tax and the levies would cause havoc to the fiscal space. Mr Kyei-Mensah-Bonsu wondered the use of extending electricity coverage, if people could not afford the cost of electricity.

Source: Daily Graphic