Energy sector needs reforms not more taxes– IERPP’s economist

A development economist at the Institute of Economic Research and Public Policy, Dr. Kwasi Nyame-Baafi, is advising the Mahama government to refrain f

A development economist at the Institute of Economic Research and Public Policy, Dr. Kwasi Nyame-Baafi, is advising the Mahama government to refrain from increasing taxes as a measure to solve the myriad of challenges faced by the energy sector.

The IERPP Senior Research Fellow, taking to his Facebook timeline to express his concerns about the recently introduced GHS1 by the Mahama government as a way of tackling the financial difficulties the energy sector faces, admonished the government to introduce reforms and not taxes if a lasting solution is the objective.

“As I’ve said before, what the energy sector needs is not more taxes, but urgent reform, reforms that will drive operational efficiency and strengthen revenue collection — especially at ECG,’’ he wrote.

“We’ve already seen the potential: ECG’s monthly revenue jumped from just over GHS 400 million to GHS 1.1 billion by December 2024. That’s clear proof that, with the right strategy, we can fix the system without burdening the people.” he added.

“Where from this GHS 1 per litre fuel tax to fix dumsor? I thought the 14.75% increase in electricity tariffs by the PURC on May 1st was supposed to address that very issue,” Dr. Nyame-Baafi wondered.

He explained the real reason accounting for the drops in fuel prices, indicating that the Organization of the Petroleum Exporting Countries, OPEC, decided to increase production, thereby reducing prices on the international market.

“Let no one be deceived, the recent drop in fuel prices is mainly because global oil prices are falling. According to Reuters, oil dropped by more than $1 a barrel in May settling at over four-year lows, hovering around $62 and $64 a barrel. This was driven by OPEC’s decisions to accelerate output increases, stoking fears of oversupply at a time when global demand is uncertain”

“So the question is: what happens when OPEC cuts supply again and global oil prices rise? Ghanaians will be hit hard, and the cost of living will become even more unbearable” Dr. Nyame-Baafi stressed.