‘Implementation of VAT on electricity is a nightmare’ — ECG boss admits

The Managing Director of the Electricity Company of Ghana (ECG), Samuel Dubik Masubir Mahama, has admitted that implementing the new contentious 15% VAT on electricity consumption will be a technical nightmare, especially for prepaid customers.

In an interview on Joy News’ PM Express on Wednesday, January 24, Mr. Mahama raised concerns about the practical difficulties of charging the VAT through ECG's billing and collection systems.

"It's a technical difficulty; it's a nightmare. How do you go about this?" he quizzed.

Mr. Mahama explained that for prepaid customers, "the consumption will be known at the end of the day, so I will only know your consumption after you have consumed. So, if I charge you the VAT when you are about to pay that will not be fair if I am charging on consumption."

This means that at the end of their consumption period, prepaid customers "will actually have a debt that needs to be settled" to account for the VAT on the electricity used.

The ECG boss stated "there’s a lot of stakeholder engagement that has to go into something like this" to address the technical hurdles of tracking consumption and charging VAT accordingly for prepaid customers in real-time.

While the finance ministry has directed ECG to start implementing the VAT from January 2024, Mr. Mahama insisted more discussions are needed due to the "bottlenecks" in properly applying the tax through ECG's billing systems.