The government hopes to raise more revenue as part of its COVID-19 recovery program, and as part of the measures taken, directed the imposition of VAT on electricity.

In a letter dated January 1, Finance Minister, Ken Ofori-Atta instructed the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) to apply the VAT to residential customers exceeding the maximum consumption level for lifeline units.

Deputy Energy Minister, Andrew Agyapa Mercer says it was a difficult decision for the government, but it is necessary to do so to clear off 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.”

People, including the Director of Business Operations at Dalex Finance, Joe Jackson, criticised the government’s decision to impose the VAT on consumers, describing it as harsh.

Kofi Kapito, the Chief Executive Officer (CEO) of the Consumer Protection Agency, also described it as ridiculous.