Deputy Minister of Energy, Andrews Agyapa Mercer has indicated that the government is willing to consider removing some taxes on petroleum products but based on some conditions.

He added that "discussions are currently ongoing between the Finance Ministry and Energy Ministry on proposals from some civil society groups, with some of the levies. That includes the BOST margin.

The Deputy Minister added, “Government is also looking at the option of even introducing some fresh programmes aimed at cushioning Ghanaians if fuel prices should go up further”.

The Deputy Ministry disclosed this when he appeared on PM Express Business Edition on October 22 about the state of the energy sector.

Mr. Mercer, however, noted that removing these taxes could come with some challenges when it comes to funding some social interventions.

He added that even though the government is committed to cushioning Ghanaians, this will come with some shocks for some sectors of the economy.  

Background

The Deputy Minister’s assurance follows calls by some civil society groups that have argued that one of the surest ways to cushion consumers in these times is to remove some taxes on petroleum products. 

Government had initially rejected calls for some of the levies to be removed.

But the Energy Ministry has now given some strong indications about its willingness to review these levies.  

A careful look at the price buildup of petroleum products showed that there are about 7 taxes and levies on fuel prices.

Energy Debt Recovery Levy, Road Fund Levy, Price Stabilization and Recovery Levy, Special Petroleum Tax, Energy Sector Levy, Sanitation and Pollution Levy. 

Government and Prices of petroleum products

Prices of petroleum products are projected to go up further in the coming weeks because of current development on the international market.  

The Organization of Petroleum and Oil Exporting Countries recently indicated that it will not increase production to increase supplies on the market.

But the Deputy Energy Minister has given firm assurance that the government will continue to take measures and actions to cushion consumers.  

The Minister rejected assertions that the government is not moving fast to cushion consumers and this shows that it is insensitive. . But Mr. Mercer noted that looking at what the government has done since the onset of COVID-19, it might not be right to argue that enough has not been done by the government to cushion Ghanaians.  

“Over the years we have taken some very important actions to support Ghanaians including fallen on the stabilization fund to support consumers,” the Minister told with host George Wiafe.

State of the country’s power sector

The Deputy Minister of Energy also announced that they have been able to deal with “Dumsor” since 2017.

However, the current challenge that might be experienced by consumers could be localized power outages and not a national power disruption.

The Minister also added that the government has been able to deal with fuel challenge issues facing most of these power companies, a move that will go a long way to reduce these outages experienced in the past.

Power Purchase Agreements with independent producers

The Minister also revealed that the government is expected to roll out some new measures that are expected to reduce its total expenditure on power produced by independent power producers as well as agreements. 

He noted the government is looking at “not buying power at a certain price, reviewing the take or pay policy and supplying these power producers with fuel going forward?”

He added that “demand keeps growing and the plan is to ensure that when the need arises to buy more power, we are not caught wanting.”

“We have also reached an agreement with some of the Independent Power Producers on waiving some of the conditions” the Minister added.