Petroleum prices are expected to go up by 5.7%, Osei Kyei-Mensah-Bonsu, the caretaker Minister for Finance has said.
Kyei-Mensah-Bonsu said the increment has become necessary due to the introduction of two new levies by the government.
Presenting the 2021 Budget in Parliament on Friday (12 March) Kyei- Mensah-Bonsu said: “I should note that on the basis of existing world crude oil prices, the implementation of the two proposed levies for sanitation and pollution as well as to pay for excess capacity charges, would result in a 5.7% increase in petroleum prices at the pump.”
He said the COVID-19 pandemic has caused additional health spending that far exceeds the government’s annual budget for health.
Kyei-Mensah-Bonsu said the pandemic has brought unprecedented challenges to the country and that there is the need to provide the requisite resources to address these challenges and fund some major projects of the government.
Introduction of new levies
He said the “government is proposing a Sanitation and Pollution Levy (SPL) of 10 pesewas on the price per litre of petrol/diesel under the Energy Sector Levies Act (ESLA). Energy Sector Recovery Levy (Delta Fund) Mr Speaker, it would be recalled that when crude oil prices increased substantially between 2017 and 2018, the government abolished excise taxes and reduced the special petroleum tax from 17.5% to 13% to mitigate the impact on domestic petroleum prices.
“However, due to the difficulties faced by our economy arising from higher excess capacity payments in the energy sector, which have not reflected in electricity tariffs. 105. Despite the substantial progress made by the Akufo-Addo government, there is the need to find additional resources to cover the excess capacity charges that have resulted from the Power Purchase Agreements (PPAs) signed by the previous Government which required payments for capacity charges even when the plants involved were idle or unutilised.”
He added: “Mr Speaker, it has become very necessary for the government to consider a review of the energy sector levies. The Energy Sector Recovery Levy of 20 pesewas per litre on petrol/diesel under the ESLA is hereby submitted to this House for approval.”