We Can't Implement VAT on Power Consumption, It has Bottlenecks - ECG MD

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Amidst disagreements over the government’s decision to impose a new Value Added Tax (VAT) on electricity consumers surpassing the lifeline threshold, the Electricity Company of Ghana (ECG) has voiced its reservations about the law imposing the tax, emphasizing the need for further deliberation.

Although the government had directed ECG and the Northern Electricity Distribution Company (NEDCO) to implement the tax starting in January 2024, ECG has opted to delay its implementation, citing concerns about the legal provision underpinning the imposition.

During an appearance on Joy News’ PM Express on January 24, Samuel Dubik Masubir Mahama, the Managing Director of ECG, highlighted the company's hesitance to simply comply with the government's directive, particularly due to perceived flaws within the 2013 law supporting the VAT imposition.

Mahama revealed that, in January 2023, ECG sought legal counsel to examine the provision in question based on its identified deficiencies. He underscored the significance of addressing any ambiguities within the law, suggesting that the government's directive offers an opportunity for enhanced stakeholder engagement to better comprehend and address the implications of the policy.

Addressing the government's directive, Mahama stressed, "Every directive allows for conversations to be had. ECG itself you have to come to ECG to ask ECG how you are going to implement this. There has to be stakeholder engagement, there has to be some form of sensitization so if you call this as a directive to me, I didn’t treat it as a directive."

READ ALSO: ECG Loses GH¢25 million Whenever It Rains - Managing Director of ECG

Moreover, he outlined the technical challenges in implementing the VAT on prepaid electricity consumers, describing it as a "nightmare" due to the complexities involved.

The imposition of the 15 percent VAT on electricity consumption has faced significant opposition, with groups and individuals condemning the move. The Trades Union Congress (TUC) even issued a seven-day ultimatum to the government to withdraw the tax.

In defense of the VAT imposition, Deputy Energy Minister Agyapa Mercer emphasized the necessity of the measure to settle debts owed to independent power producers, framing it as an integral part of the government's COVID-19 recovery program.

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