Actual levies collection under the Energy Sector Levy Act (ESLA) for 2020, exceeded government’s target by Ghs 129.72 million – 2.8 percent above the revised target.
The 2020 ESLA revised budget amount as a result of the Covid-19 pandemic on government’s revenues, was estimated at a total of Ghs 4,437.31 million which was to be collected during the year.
Of this amount, actual collections amounted to Ghs 4,567.03 million.
According to government, the additional Ghs 129 million mobilised from levies collection was due to the increase in consumption volumes of petroleum products and the pass-through effect of the increase in the Energy Debt Recovery Levy (EDRL) and Road Fund Levy (RFL) in August 2019.
Of the total collections made in 2020, the government asserts that an amount of Ghs 4,312.93 million was lodged into the ESLA accounts with some Ghs 3,620.25 million utilized.
A breakdown of government’s utilisation of the ESLA levies are as follows;
- GH¢381.60 million was utilised for payments of Power Utility debt;
- ii. GH¢1,758.42 million was transferred to E.S.L.A. PLC to settle the coupon payments to bond holders;
- iii. GH¢288.43 million was utilised on Premix Subsidy, Residual Fuel Oil Subsidy, and related expenditure;
- iv. GH¢970.00 million was transferred to the Road Fund out of which GH¢964.55 million was utilised on road maintenance and repayment of loans contracted by the Ghana Road Fund Secretariat. The shortfall in transfers to the Road Fund of GH¢724.99 or 42.8 percent was mainly as a result of transfer of part of Road Fund lodgements to support the Budget in line with Government’s capping policy on the statutory funds;
- GH¢19.52 million was transferred to Energy Commission, out of which GH¢19.38 million was expended to meet its programmed activities for the year. Shortfall in transfers to the Energy Fund was, likewise the Road Fund, attributable to the implementation of Government’s capping policy of the statutory funds; and
- A total amount of GH¢141.74 million was transferred to Ministry of Energy, out of which: GH¢65.49 million was spent to cover the cost of Public Lighting; and
- GH¢76.25 million on the provision of Public Lighting Infrastructure vii. A total amount of GH¢60.55 million was retained by the EDCs and same was utilised to cover the cost of public lighting
Meanwhile, Government says it has refinanced Ghs 8 billion out of the Ghs 10 billion energy sector debts bequeathed to it by the previous government.
According to government, the refinancing has been possible due to the amendment of the Energy Sector Levy Act (ESLA) into a Special Purpose Vehicle (SPV) – ESLA Plc – to issue long-term bonds backed by ESLA receivables.
“Over the last four years, E.S.L.A. PLC successfully refinanced debts in excess of GH¢8.00 billion under the programme. Out of this amount GH¢1,870.3 million was settled in cash to creditors, while the remaining GH¢6,186.1 million was covered by debt swaps,” said government.
According to government, the performance of the Energy Sector Levies was adversely impacted by the COVID-19 pandemic as expected receipts from 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.
Government however, outperformed its target in petroleum levies mobilization by about 7 percent, despite the partial withdrawal of the Price Stabilisation Levy in early 2020 to cushion consumers from paying higher petroleum prices at the pumps.
As noted earlier, 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.
On the outlook of the of the levies in the medium-term, government asserted the outlook remains positive as overall projection is expected to record an average growth of 12 percent (Ghs 634 million) over the medium-term (2021-2024).
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.