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2020 Annual Report on the Management of the Energy Sector Levies and Accounts

2020 Annual Report on the Management of the Energy Sector Levies and Accounts

Government established the Energy Sector Levies Act (ESLA) 2015, Act 899, as amended, to consolidate levies collected under the sector, provide funding for power generation and the clearance of legacy debts accumulated within the sector, support road maintenance, provide funding for the regulation, management, development and utilisation of sustainable energy resources under the Energy Commission, provide funding for investments in public lighting and the National Electrification Programme, and subsidise Premix and Residual Fuel Oil. 

In 2017, when H.E President Nana Akufo-Addo assumed office, the debts on the books of SOEs operating within the Energy Sector had reached extraordinary and unsustainable levels. The accumulation of these hard-core liabilities or legacy debts, impacted negatively on the ability of the SOEs to meet their short to medium-term contractual obligations to their creditor banks, suppliers, and trade creditors, as the SOEs became technically and financially insolvent. 

Recognising that a financially healthy energy sector is essential to revitalising the economy and creating the enabling environment for H.E. the President’s transformation agenda, we embarked on vigorous reforms to restructure the Energy Sector to keep the SOEs in operation and make them viable. 

As part of the reforms, E.S.L.A PLC was established as a Special Purpose Vehicle (SPV) to issue long-term bonds backed by ESLA receivables to resolve energy sector debts of almost GH¢10.0 billion owed to banks and trade creditors. Over the last four years, E.S.L.A. PLC successfully refinanced debts in excess of GH¢8.00 billion under the programme. A cumulative amount of GH¢5.03 billion transferred to E.S.L.A. PLC, from the levies realised was utilised partly to meet the required coupon payments to bondholders. 

The performance of the Energy Sector Levies, like other sectors of the economy, was adversely impacted by developments in 2020 occasioned by the COVID-19 pandemic. The expected receipts from the electricity levies were not realised due to a slowdown in business activity at the onset of the pandemic coupled with lower recovery of electricity bills from households and businesses severely hit by the pandemic. 

The Petroleum levies on the other hand, outperformed the target by about 7.0 percent, despite the partial withdrawal of the Price Stabilisation Levy in early 2020 to cushion consumers from paying higher petroleum prices at the pumps. The positive performance was as a result of an increase in the Energy Debt Recovery and Road Fund Levies towards the end of 2019 without a corresponding revision of the 2020 targets, as well as an increase in the volume of petroleum products consumed in the last two quarters of 2020 when the coronavirus restrictions were eased. 

In addition, proceeds from the Petroleum levies under the ESLA were utilised for power sector infrastructure support, road maintenance and repayment of loans contracted by the Road Fund, support for fisher folks and industries through the provision of subsidies on Premix and Residual Fuel Oil, and to fund the activities of the Energy Commission. 

Proceeds from the electricity levies, on the other hand, were utilised to modernise electricity infrastructure in the newly created regional capitals and increase access to affordable and sustainable electricity. This increased access to electricity at the end of 2020 to about 85.0 percent, with over 10,000 communities connected to the National Grid. Similarly, levies collected for public lighting were utilised to partially defray street/public light bills, expand public lighting infrastructure, and improve nighttime visibility on our highways, motorways, and dark streets across the country. 

We will continue to remain committed to Ghanaians and our other stakeholders, to ensure that we account for our stewardship, to promote a prudent, transparent, efficient, sustainable and financially viable energy sector as we have done since 2017. 

I wish to express my appreciation to all Stakeholder Institutions including MoF, MoEn, GRA, CAGD, NPA, ECG, VRA, NEDCo, the Ghana Road Fund Secretariat, and the Energy Commission and their representatives on the Technical Working Group for the commitment shown throughout this challenging year and in preparing this report. My sincerest gratitude also goes to my colleague Minister for Energy, the Chief Executives and Managing Directors of all the Stakeholder institutions on the ESLA, as well as E.S.L.A. PLC for their input and assistance towards the effective implementation of the ESLA. 

Finally, I wish to thank all Ghanaians, especially Civil Society Organisations and the media, for their continuous support, monitoring and review of developments within the sector, which have been very instrumental in ensuring that we continue to pursue policies to promote sustainable investments in the energy sector to provide stable, affordable, and efficient power supply for all Ghanaians. 

God bless. 

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