According to former Finance Minister Seth Terkper, the government is unable to pay or reduce subsidies on petroleum goods since the funds for the subsidies have been collateralized.
The Energy Sector Levies Act (ESLA) 2015, Act 899, as amended, was established by the government to combine levies collected in the sector, provide money for electricity generation, and remove residual debts amassed within the sector.
This intended to fund road repair, provide financing for the Energy Commission’s regulation, management, development, and use of sustainable energy resources, provide funding for public lighting and the National Electrification Program, and subsidise Premix and Residual Fuel Oil.
According to Seth Terkper, after the ESLA was collateralized, the funds were no longer available to be used for their intended purposes.
“Prof the reason why the government cannot pay a subsidy or decrease taxes is straightforward,” he stated, because we had built that money, the Price Stabilisation Levy, some of it was utilized to settle the outstanding subsidies, and then we started the strategic stocks with the TOR bond.
“That money isn’t available right now; it’s been collateralized for the ESLA bond.” What did we do with all of that cash?
“The second point is, why aren’t you able to lower those taxes and the rest?” Much of the energy sector levies are in ESLA, which was designed to pay down road and other debts, so if you remove them, where will you get the money to service the ESLA bond?” he stated