In a bid to bolster its COVID-19 recovery program, the government has elucidated the reasons behind the implementation of a 15 percent Value Added Tax (VAT) on electricity consumption.

The move is geared towards generating additional revenue to support the recovery efforts.

Deputy Energy Minister Agyapa Mercer, in an interview with Citi FM on Monday, January 15, underscored the challenging nature of this decision.

Nevertheless, he emphasized its necessity, particularly in settling outstanding debts owed to independent power producers.

“Obviously, if you look at the scope of the tax and what it is intended to do—raise revenue to meet some obligations of the government in the energy sector—it will interest you to know that, as we speak, as of July 2023, the amount of money that we owe to the IPPs alone is in the region of GH¢1.7 billion.”

Increasing demands from the Minority and energy experts urge the reconsideration of the Value Added Tax imposed on specific residential electricity consumers.

In a correspondence conveying the Finance Ministry's policy to the Public Utility Regulatory Commission, Finance Minister Ken Ofori Atta indicates that the value-added levy will be applicable to electricity consumption beyond lifeline units.

The ministry clarifies that this initiative is a component of the government's Covid-19 recovery program.