The Africa Centre for Energy Policy (ACEP) has backed the introduction of the Power Infrastructure Support Levy on petroleum products.

 The levy is to be used to defray the debts of utility companies and support prospective investors in the sector among others.

President Mahama at a press conference on Tuesday, justified the imposition of the new taxes as critical in reviving the ailing energy sector.

He explained that utilities have accumulated debts over the last 15 to 20 years “and as a result of this, it has choked the credit lines of the utility companies to the extent that VRA today cannot go to any bank and establish a Letter of Credit (LC) because I think they owe virtually every bank in Ghana.”

This, he indicated must be dealt with and that government needs to take that money from somewhere and the point is “at a time that God has blessed us to have the price of petroleum products go down 37 percent and we are still 11 percent lower than what the prices were before we introduced the deregulation regime, if we take a little money and say let’s all contribute and pay off this debt because we all use that power the VRA generated, I don’t see what really we have done wrong.”

Speaking with JOY BUSINESS, the Executive Director of ACEP, Dr. Mohammed Amin Adam stated that although the centre welcomes the introduction of the Levy, they want government to strictly stick to its intended purpose – using it to pay off the debts of the utilities.

He added that ACEP deems the levy an important one considering the fact that the power sector is a major concern to Ghanaians and that it is the engine of growth for every economy.

He stressed however, that the centre has challenges with the debt because “we think the debt has been accumulated as a result of inefficiencies on the part of ECG and also government’s own negligence towards paying its debts to the utility providers.

“We however, do not think that the levy should be used to support generational infrastructure development.”

This position according to Dr. Amin Adam is because “when investors invest in generation projects they are paid capital recovery charges that allows them to recover the cost of their investment therefore, it is not good for consumers to be paying capital recovery charge for generation and at the same time be asked to pay a levy to be used for the support of generation infrastructure development.”