Finance Minister Ken Ofori-Atta has reiterated that the 15% Value Added Tax (VAT) on electricity consumption, particularly for lifeline consumers, will not pose a significant burden.

He emphasized that the additional cost for lifeline consumers, estimated at GHS100 annually, is manageable for the average Ghanaian.

In an interview with Joy FM, the Finance Minister addressed concerns about the impact of the VAT on electricity, emphasizing the government's objective to generate revenue for essential services and infrastructure development.

The Minister initially announced the 15% VAT during the 2024 budget presentation, assuring Ghanaians that the impact on lifeline consumers would be minimal.

However, Elikplim Apetorgbor, CEO of Independent Power Producers (IPPs), expressed opposing views, urging policymakers to assess the broader economic consequences.

Apetorgbor outlined potential challenges, including reduced demand, increased compensation for idle capacity, impact on economic growth, energy poverty, investment disincentives, financial stress on utilities, grid instability, regulatory and political challenges, quality of service issues, barriers to electrification efforts, and inflationary pressure.

He further highlighted the implications for the West Africa Power Pool (WAPP) or Regional Electricity Market (REM), emphasizing the potential negative impact on Ghana's competitiveness, cross-border energy trade appeal, regional integration efforts, and achieving economies of scale.

Understanding these implications is deemed crucial for balancing domestic fiscal needs with regional energy integration and competitiveness. The implementation of VAT on electricity consumption in Ghana could have far-reaching consequences that extend beyond domestic policy considerations.