ECG may not collect vat on residential power consumption

As part of the government’s short-term Revenue Mobilization Strategy and the IMF supported Post Covid-19 Program For Economic Growth, the Finance Ministry directed the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO ) to work with GRA to charge VAT on power consumption above the maximum level specified for block charges for lifeline unit effective January 1, 2024.

However, according to sources, ECG may not be able to charge the VAT because its current Management System is unable to support the programming required to implement the VAT. Our source further indicates that ECG is in the process of developing a new Management System, that will be more responsive primarily to deliver efficient services to its customers and may support the necessary programming to implement the VAT as directed by the Ministry of Finance.

We learned that the Management System ECG uses currently was procured several years ago on the advice of the International Monetary Fund and the World Bank, and from all indications has not been efficient and responsive because it was a generic application. Our source noted, however, that the new Management System being developed is tailored to the operations of ECG.

So, ECG residential customers will not be charged any VAT, at least until ECG completes work on its new Management System.