The Institute of Energy and Climate Change Policy (IECP) has backed the Finance Minister, Ken Ofori Atta to retain the Energy Sector Levy in the medium term.
The levy which was imposed by the erstwhile John Mahama administration was aimed at clearing debts that have accrued in the sector due to government’s inability in paying for fuel purchased.
The New Patriotic Party however promised to scrap the levy describing it as nuisance tax, which unnecessarily burdened the private sector.
But speaking to Citi Business News, the Director of Research and Policy at the IECP, Dr. Philip Adom stated that even though the government promised to scrap the levy, it will be detrimental to the country if removed, hence must be maintained.
He appealed to Ghanaians to understand the current circumstances the energy sector is operating since any attempt to even reduce the levy may plunge the country back into dumsor.
“The politician came to make a promise we voted [them] into power. We expect them to go by the words, but having said that we should look at the issue from a broader perspective. You have to ask yourself the question what is going to happen should the government remove the energy sector levy now,” he quizzed.
He warned that it will not be prudent to stampede the government into scrapping the levy just because it was promised prior to the election.
He pointed out that there is a need to ascertain the impact of the levy, since removing it may derail all efforts achieved in paying the debts.
“In the short term it will bring some relief in terms of utility tariff, but then in the long term would it be good in the sustainability of the energy sector?. In the long term, is it going to ensure that we have constant power supply at our end, as end users?. I think there is a conflict of interest but for now we should look at the impact. Now it behooves on the government to come back to the people and explain,” he said.