Presidential Advisor on the Economy Seth Terkper says the finance and energy ministers are right in their explanations of the new GH₵1 fuel levy, stressing that the issues they raised were closely connected.
Speaking on Joy FM’s Super Morning Show, Mr Terkper explained that the country is dealing with both long-standing energy debts and current supply challenges, and both require funding.
“Both are correct in a sense,” he said. “If you have legacy debt, which is huge and the result of the misapplication of ESLA and its collateralisation, and you are having issues with it, and then you also have the current challenges in the sense that if you don’t have resources to tackle the current challenges like fuel supply, which the energy minister spoke about, it will worsen your ability to settle the energy sector debt. So they are interrelated.”
Mr Terkper clarified that while the two ministers are looking at different aspects of the same problem, their concerns are connected. “I see clearly the two aspects from the two ministers, but I just want to clarify that they are related,” he said.
[embedded content]He also described the levy as having a structural component and pointed out gaps in the current pricing framework.
“Now the levy is also structural in a sense, in that you are determining the price at which something should be sold, and there is a key element which is not covered, which is what the energy minister was talking about – the electricity tariff. So going forward, that would be a structural issue for PURC, NPA, and the energy sector regulators,” he said.
Mr Terkper emphasised the importance of planning, especially in times of economic stability.
“I’ve always said, particularly in relation to COVID, that the time to prepare for a crisis is not when you are in crisis. The time to prepare for a crisis is when you are creating buffers when the global environment is favouring you, such as gold in relation to the dollar, sanitising the gold sector, and building reserves,” he noted.
He added that Ghana is currently in a period of austerity and structural reform, and this context makes the timing of the levy important. “If we have to introduce something that would be neutral, then this is the appropriate time for it. You don’t introduce that structural measure after everything has passed; it just worsens,” he said.
Mr Terkper continued by saying that stabilising energy and fuel supply is crucial to preventing further harm to the economy.
“The interventions that are needed to stabilise power, to stabilise fuel supply and others, which, by the way, we didn’t do, will have an adverse effect on growth,” he said.
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