Business News of Monday, 24 November 2014

Source: Graphic.com.gh

Parliament waives taxes on Kpone power plant

Parliament has adopted a resolution for tax exemptions amounting to US$57,501,825.00 on goods and services required for the construction of a 340 megawatts independent power plant at Kpone in the Greater Accra Region to augment the country’s power generation.

The waiver is on customs duties, value added taxes (VAT), national health insurance levy, destination inspection fees, Export Development and Agricultural Investment Fund (EDAIF) and ECOWAS levies withholding taxes and other project related taxes.

Giving the background to the project, the Chairman of the Finance Committee, Mr James Klutse Avedzi, Member of Parliament for Ketu North, who moved the motion yesterday, said the move was in line with the government’s policy to increase the country’s current installed capacity from the current level of about 2,000 MW to 5,000 MW and develop a non-congested transmission system by December, 2015.

According to the committee, that required accelerated efforts to increase generation, reinforce and expand the electricity transmission grid to ensure reliable and secure evacuation of power to meet the increasing national demand.

To that end, the Electricity Company of Ghana (ECG), with support from the government, entered into an agreement with independent power producers to complement its efforts to achieve that objective.

The committee’s report said in August 2009, Cenpower and the ECG entered into a power purchase agreement under which Cenpower agreed to supply ECG with 200 MW of power. Under the agreement, the ECG will assume 60 per cent of ownership of Cenpower at the end of the 20-year term. Following the review of the deal in 2010, the ECG agreed to increase its offtake to 340 MW full capacity of the plant.

It said to give effect to the partnership, the Ministry of Finance got approval from Parliament for the government’s consent to support the agreement between the government and the Cenpower Generation Company Limited for the construction of a 340 MW power plant at Kpone in a memorandum which also requested the exemptions.

The breakdown of the exemptions are customs duties, destination inspection fees, export development and investment fund and ECOWAS levies of US$29,308,275.00, domestic VAT/NHIL of US$16,975,000.00 and VAT/NHIL on imported services, amounting to US$11,218,550.00.

The project is expected to create 600 jobs at peak construction, employ more than 200 permanent staff over the 20-year duration of the public-private partnership. It will also improve the competence level of the workforce, especially the neighbouring communities, improve the standard of living of the people through the provision of reliable power supply and the promotion of industrial development, especially small and medium scale enterprises, which should help reduce poverty.