Revenue Loss in Petroleum Taxes Hit 1.8Bn in 2017 – Report

Ghana lost GHC 1.4 billion in taxes and regulatory margins from smuggling and export dumping of petroleum products in 2017.

According to a  2017 industry report by the Ghana Chamber of Oil Distributors (CBOD), it marks a 64.71% increase in revenue loss from the NPA’s 2016 position of GHS850m.

Meanwhile general revenue losses in petroleum taxes, levies and regulatory margins in that same year amounted to GHC 1,888 bn.

Out of the total amount, GHC 148.93m was lost through transfer pricing.

Energy Sector levy cash under-reported

The report also revealed that government failed to account for over GHC 500 million from the Energy Sector Levy Act (ESLA) taxes in 2016.

“An analysis of the NPA OMC performance data shows that government failed to account for GHS576.63mn for 2016 and GHS339.16mn for 2017 in ESLA taxes. The 2016 volumes indicate that government earned a total of GHS3,875.56mn (assuming that GoG’s report on the receipts from the power sector and the balance brought forward from the Petroleum Debt Recovery Levy Account are accurate). However, the report by the Minister of Finance to Parliament stated that GHS3,298.94mn was raised.

“The Minister of Finance reported to parliament that an amount of GHS3,151.74mn was realised in ESLA receipts for 2017. This position is irreconcilable with computed ESLA receipts earned, based on NPA confirmed 2017 OMC performance data, which indicates that GHS3,490.90mn should have been collected,” the report said.

The Chamber said the situation is “extremely alarming and suggestive of high-level corruption and tax evasion.”

It, therefore, suggested an immediate investigation into the development, saying “It is imperative that government commissions an investigation into this matter immediately.”

Why was Energy Sector Levy introduced?

The Energy Sector Levy was introduced in December 2015.

The primary aim was to among others, raise revenue to meet the increasing debts owed major institutions in the energy sector, that is the Volta River Authority (VRA), Ghana Grid Company (GRIDCo) and the Electricity Company of Ghana (ECG).

The government subsequently in July 2016 restructured the 4.4 billion cedis (1.4 billion dollars) debt with the major banks owed in the country.

As part of the arrangements, the government together with the Bank of Ghana agreed to create an escrow account to transfer 250 million cedis to settle part of the debts owed to 12 banks in the country.

Also, the dollar component was reduced from 11 percent to 8.5 percent, while the cedi component was decreased from 30 to 22 percent.

The government has since made two separate payments to the affected banks.

Source: Citinewsroom