President John Dramani Mahama has announced his commitment to ring-fence proceeds from the newly amended Energy Sector Levies Act (ESLA) to specifically utilize it for the intended purpose.
The amended Energy Sector Levy aims to tackle the sector’s legacy debt, which currently exceeds US$3.1 billion, and ensure uninterrupted power generation in the country.
Parliament approved the amendment which introduced a GH¢1 per litre levy to help generate revenue that will deal with the challenges of the sector. This adjustment is projected to generate an additional GH¢5.7 billion annually.
President Mahama emphasized that this decision, though difficult, is necessary to stabilize the economy and secure the nation’s energy future.
To build public trust and ensure effective use of the funds, President Mahama has pledged that the additional revenue will be strictly ring-fenced. The proceeds will be dedicated solely to paying down legacy energy debts, financing ongoing fuel purchases, and averting the risk of recurring power shortages.
This means the funds will not be subjected to the Consolidated Fund but will be managed separately with regular audits and public disclosure of audit reports.
Addressing concerns about potential fuel price increases due to the levy, President Mahama assured that the recent appreciation of the Ghanaian cedi and gains in macroeconomic stability would offset the impact of the levy.
As a result, no immediate fuel price hikes at the pump are expected.
Looking ahead, the government anticipates increased gas supply from domestic sources, including the ENI Sankofa, Jubilee, and TEN fields, as well as additional gas through the West African Gas Pipeline (WAGP).
This shift is expected to reduce reliance on liquid fuels, allowing more resources from the levy to be allocated toward settling accumulated legacy debts in the power sector.
President Mahama’s commitment to ring-fence the proceeds from the increased Energy Sector Recovery Levy represents a significant step toward resolving Ghana’s energy sector legacy debt. It signifies that the government has learnt from the mistake of the past when the previous administration diverted the funds from ESLA for other purposes leaving the core function.
