Ghana generated GHS6.7m from Energy Sector Levies in 2022 – Finance Ministry

The Ministry of Finance has revealed that the Actual Energy Sector Levies collected from January to December 2022 totalled
GH¢6,703.30 million.

The ministry made this known in the 2022 Annual Report on the Management of the Energy Sector Levies and Accounts.

The revenue generated saw a decline from the total of GH¢7,281.70 million estimated as total Energy Sector Levies to be collected for the 2022 Fiscal Year.

This implies that the actual collection was below target by GH¢578.40 million or 7.9 percent, and according to the Ministry of Finance, this was mainly on “account of low consumption of petroleum products and unrealised power sales.”

The 2022 collections, however, recorded an increase of GH¢409.43 million (6.5 percent) above the 2021 collections of GH¢6,293.87 million due to an increase in the volume of petroleum products lifted compared to the 2021 volumes.

Meanwhile, total lodgement into the established and other accounts under the ESLA amounted to GH¢6,429.59 million, out of the collections of GH¢6,703.30 million.

The lodgement was below collections by GH¢273.71 million, representing 4.1 percent, on account of retention on the Road Fund and Energy Fund Levies by GRA, unpaid invoices by OMCs, and the inability of the EDCs to transfer PLL and NESL collections to the Ministry of Energy.

A total of GH¢5,804.60 million of total levies lodged into the ESLA accounts was utilised at the end of December 2022. The amount was utilised mainly to pay for power utility debts, effect transfer to E.S.L.A. PLC to settle coupon payments to bondholders, provide subsidy for Premix Fuel and RFO, provide funding for public lighting infrastructure and power consumed by public lighting, support road maintenance and the activities of the Energy Commission, as well as to support the National
Electrification Programme.

A total of GH¢8,076.52 million is programmed to be collected in 2023 in respect of the ESLA. The estimated collection for 2023 represents 10.9 percent increase in collections compared to the 2022 programmed collections of GH¢7,281.70 million, and 20.5 percent increase over the actual 2022collections of GH¢6,703.30 million.

According to the report, the outlook for the levies remains positive with projections showing significant growth over the medium-term. Amounts of GH¢9,644.94 million, GH¢11,249.96 million, and GH¢13,098.72 million are estimated for collection in 2024, 2025, and 2026, respectively.

The 2022 Annual Report is prepared in accordance with the provisions of Section 6 of the Energy Sector Levies Act (ESLA), 2015 (Act 899).

Background

The Energy Sector Levies Act, 2015 (Act 899) as amended, was established to:
i. consolidate existing energy sector levies to promote prudent and efficient utilisation of proceeds
generated from the levies;
ii. impose a Price Stabilisation and Recovery Levy;
iii. facilitate sustainable long-term investments in the energy sector; and
iv. provide for related matters.

The levies were reviewed and subsequently amended in 2017, 2019, and 2021. In 2017, the Public Lighting and National Electrification Scheme Levies were amended and reduced from 5.0 percent per kWh to 3.0 percent and 2.0 percent, respectively.

The objective of the amendment was to reduce the burden of payment of electricity bills, reduce incidence of illegal connections, and ensure more affordable electricity for Ghanaians.

In 2019, the Energy Debt Recovery Levy (EDRL), Road Fund, and Price Stabilisation and Recovery Levy (PSRL) were revised upwards to correct for the loss in value due to currency depreciation and inflation over the years without a commensurate increase in the fixed specific-type levies in the Price Build-up.

The 2021 amendment introduced the Energy Sector Recovery Levy (ESRL) or Delta Fund Levy, and the Sanitation and Pollution Levy (SPL).