The government has officially suspended the planned implementation of the 15% Value Added Tax (VAT) on domestic consumption of electricity.
In a press statement issued by the Ministry of Finance on Wednesday, February 7, 2024, both the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) were directed to halt the charging of the levy.
The decision to suspend the VAT implementation was made to allow for extensive dialogue and to obtain input from industry players and labor unions. Concerns had been raised about the potential impact of the tax on consumers and businesses, prompting the need for further consultation.
“On behalf of the government, the Ministry would like to inform ECG and NEDCO to suspend the implementation of the VAT directive pending further engagements with key stakeholders, including organized labor,” the statement from the Ministry of Finance read.
The government had initially directed the imposition of the VAT policy on electricity consumers above the maximum consumption level specified for block charges for lifeline units. This directive was intended to support the country’s Medium-Term Revenue Strategy and the IMF-Supported Post-COVID-19 Program for Economic Growth (PC-PEG) by mobilizing revenue. However, the decision faced strong opposition from various interest groups who deemed it punitive and poorly thought out.
Earlier reports indicated that the government was considering engaging with the International Monetary Fund (IMF) to discuss the anticipated revenue shortfall and seek a consensus on the suspension of the VAT on electricity.
“The Ministry expects that these engagements will lead to innovative, robust, and inclusive approaches to bridging the existing fiscal gap while bolstering economic resilience,” the release from the Ministry stated.
Organized labor had planned a nationwide demonstration on February 13, 2024, to call for the withdrawal of the directive to implement the 15% VAT on residential electricity consumption. Earlier this week, members of the labor unions wore red bands at work as a symbol of their readiness for a nationwide strike if the VAT directive was not withdrawn following the demonstration.
The official suspension of the controversial 15% VAT on electricity demonstrates the government’s responsiveness to the concerns raised by various stakeholders. It also paves the way for further engagement and dialogue to find alternative solutions that balance revenue generation with the welfare of consumers and businesses.
The Electricity Company of Ghana (ECG) has reassured the public that there is no need for a load-shedding timetable despite recent power interruptions.
In response to concerns about power supply challenges, ECG stated that the current issues do not warrant the implementation of a load-shedding timetable.
Laila Abubakar, the External Communications Manager at ECG, clarified that the recent power cuts may be due to other factors and emphasized that the notorious ‘dumsor’ phenomenon has not returned.
She assured the public that ECG’s management is diligently working to address the challenges facing the power sector.
“The thing is, we just want people to be aware that when your power goes off, it is not always a matter of load shedding. There are several issues and there are some of them that fall before the doorsteps of ECG. We are doing as much as possible to solve the ones that we can.”
“There aren’t any issues with shedding load. The load shed, I think is what people understand by ‘Dumsor’. But usually, when someone asks me if, there is Dumsor, I ask them what do you understand and what do you think ‘Dumsor’ means. Unfortunately, there wouldn’t be a timetable,” she insisted.
Meanwhile, John Abdulai Jinapor, the Ranking Member on Parliament’s Mines and Energy Committee, has asserted that the ongoing power outages in various parts of the country stem from financial constraints rather than faulty transformers.
Mr Jinapor refuted claims by the ECG that the outages were due to transformer repairs, alleging that the root cause is a shortfall in electricity generation capacity.
The Ashaiman District of the Electricity Company of Ghana has discovered a total of 130 illegal connections within its operational area over a three day period.
The discoveries, which were part of a revenue mobilisation project the district was embarking on was started on Monday, March 4, 2024.
Speaking on the progress of the activities to media professionals, the Manager for the District, Ing. Kissi Ohenebeng mentioned that “with the 130 illegal connections seen, summons were given to the respective customers who started reporting to the office from Tuesday, March 5, 2024, to rectify the issues identified.”
He added that “over the three days that the project had been ongoing, his outfit, with support from a number of staff from eight other districts as well as the regional office of the Tema Region of the company had been able to visit over 5000 customers of the power distributor”.
Ing. Ohenebeng, when asked about possible prosecution of those caught with illegal connections indicated that “indeed should customers default in payments, the company is always ready to explore the possibility of addressing the situation at the court”.
He further added that “illegal connection is basically stealing, which makes it a criminal offence and admonished customers to desist from such acts as the consequences could be unpleasant.”
The Ashaiman District of the ECG is under the Tema Region, which also has Tema North, Tema South, Afienya, Prampram, Ada, Nungua, Juapong, Krobo Districts. Staff were deployed from all over the region to Ashaiman District to support the special revenue mobilisation exercise.
The Acting General Manager of the ECG Tema Region, Ing. Daniel Asare-Mensah on his part, encouraged customers to “be ready to pay for power consumed and to pay on time to avoid debt build up.”
Ing. Asare-Mensah indicated that the Ashaiman exercise would end by close of day Friday, March 8, 2024, while a similar project with support from the region’s workforce will be replicated in the other districts.
He also indicated that the Afienya and Prampram Districts will be the next to run such special revenue mobilisation exercises.
The Electricity Company of Ghana Ltd. (ECG) has commenced an exercise to replace over 450,000 old metres in the Accra West region.
The Company over the course of the exercise would be replacing postpaid, non-smart prepaid and faulty metres in the region with MMS-compliant smart prepaid metres, over the next five months.
The metre replacement exercise is part of the Company’s Loss Reduction Programme (LRP); an initiative to facilitate the installation of smart meters, and to improve energy accounting.
The programme aims to ensure the availability of metres to meet service connection requests and reduce system losses.
The Accra West region General Manager of ECG, Ing. Emmanuel Akinie assured customers of the convenience that the smart prepaid meters offer.
“With the smart prepaid metres, a customer can buy credits unto their metres from the comfort of their homes or anywhere they are, by downloading the ECG Power app, or using the short code *226#”, he said.
Mr. Akinie revealed that the officers undertaking the replacement exercise will identify themselves with official letters from ECG, authorizing their activity, and assured that outstanding balances on the old metre will be accounted for, and transferred to the customers’ new smart prepaid metre.
He said the metre replacement exercise is free, hence encouraged customers to allow the officers into their premises to replace their old metres.
Districts in the Accra West region are Ablekuma, Achimota, Amasaman, Bortianor, Dansoman, Kaneshie, Korlebu and Nsawam.