THE Ghana Chamber of Mines is protesting the imposition of the Growth and Sustainability Levy (GSL) on extractive sector companies in Ghana, saying “the GSL will deepen the losses of some mining firms in Ghana.”
The Chamber is also unhappy with the Energy Debt Recovery Levy, the Price Stabilization and Recovery Levy and other levies which are negatively impacting the operations mining companies in the country.
“The immediate application of the Levy will lead to an increase in the cost of operations at a time when the financials of the companies have already been concluded without considering the impact of the impost,” the Chamber lamented.
The Levy, a non-deductible expenditure and pegged at 1% of production has been passed by Parliament as Growth and Sustainability Levy (GSL) Act, 2023 (Act 1095).
President of the Chamber, Mr Joshua Mortoti addressing shareholders, member companies and other stakeholders at the 95th Annual General Meeting (AGM) of the Chamber said “the Levy endangers the continuous operations of some mines and risks curtailing the expected cash flows associated with the impost.”
Mr Mortoti warned that any such cash flow issues arising from the impostion of the levy would not only hurt the state’s revenue objectives but also threaten the security of employment, businesses of mining support service firms, as well as mining firms’ continued investment in their host communities.
The Chamber, Mr Mortoti said appreciated the need for government to generate additional revenue to address the grave fiscal imbalance in the economy, however the introduction of the GSL could have the Ghana Revenue Authority (GRA) paying a heavy price as the collector, and throw the state’s general revenue objectives into disarray.
“The non-deductible nature of GSL particularly, could be described as an aberration from global practices as it effectively increases the risk borne by investors in Ghana’s mining sector without a complementary compensation measure from the government. This trend could foul the taxation environment and turn it into something else from what it currently is,” Mr Mortoti opined.
The Chamber, therefore urged deeper engagement with government to find an optimal solution for both parties.
According to Mr Mortoti, an amicable solution to the problem was particularly critical for listed companies on both the Ghana Stock Exchange (GSE) and other bourses, since industry analysts, fund managers, and the investor community in general, tend to be averse to sudden imposts and all other changes in the investor environment, which are not convincingly explained to them.
It will be recalled that the Minister of Finance announced the introduction of a Growth and Sustainability Levy (GSL) on extractive sector companies in the 2023 Budget Statement and Economic Policy.
Market forces must determine prices of diesel supplied to mines
The Chamber urged government to allow market forces to autonomously determine the ex-refinery price of diesel supplied to the mines to help exert downward pressure on prices and improve the service delivery in the supplies of diesel to the mines.
According to the Chamber, unlike the retail market, the ex-refinery price of diesel supplied to the mines is largely determined by the National Petroleum Authority so “in a sense, the mining industry, and other consumers in the export segment of the petroleum market do not benefit from the gains associated with deregulation.”
Exclusion from energy debt recovery levy
The Chamber further called for the exclusion of the Energy Debt Recovery Levy from the price build-up of diesel supplied to the mines as “it weighs heavily on the price competitiveness of diesel supplied to the mines.”
Expunge Price Stabilization and Recovery Levy from price build-up
The President of Chamber The inclusion of PSRL, in the price build-up of diesel supplied to the mines is not only superfluous but also analogous to double taxation. In that regard, it would be apt for the government to expunge PSRL from the price build-up of diesel supplied to the mines.