Parliament approves US$27m tax waiver for 370MW AKSA project

Parliament has approved a US$27 million tax waiver for independent power producer AKSA Enerji Uretim AS (AKSA) for the provision, on a fast-track basis, of up to 370MW of electricity to the national grid.

The waiver, which reflects only the tax component of the project’s core aspects, covers import duties, import VAT, import NHIL, ECOWAS Levy, Exim Levy, and Special Import Levy among others on project equipment and materials under the emergency power agreement between government and AKSA.

AKSA is to deploy, in the short- to medium-term, a plant of up to 22 units of Wartsila 18V 46 engine generator set (units) with a capacity of between 16 and 17.5MW per unit at Tema.

The AKSA Project is in line with the immediate goal of government to diversify generation plant fuel mix and close the energy supply gap in order to make available stable electricity to consumers and catapult economic growth.

In the interim, AKSA is required to deploy 14 units for the generation of 220MW of power. Upon installation and successful passing of the required operational tests, additional 8 units will be added to increase guaranteed capacity to 370MV.

The implementation of the 370MW AKSA Project is aimed at helping to meet the demand for electricity in Ghana in the short to medium term while arrangements are made to construct medium to long-term power projects for the electricity needs of the country.

Parliament’s Finance Committee observed in a report that one of the key constraints facing the development of private power plants in the country is the lack of a suitable bankable project structure.

Due to the capital-intensive nature of power projects as well as the pressing timelines associated with them, government support is required in order to attract and sustain much-needed private sector investment into the power sector, it said in support of the tax waivers.

Thermal power plants in Ghana are currently constructed with the benefit of an investment promotion programme, under which the importation of equipment, machinery and materials used in connection thereof are allowed in free from Customs duties and other taxes.

The Committee report also noted that the capacity charge for the AKSA Project, made up of both the Capital Recovery cost and the Fixed O&M Charge, stands at 4.500 United States Cents/kWh.

This, it said, compares favourably with other existing and ongoing power plants in operation or under construction in Ghana.

“Under the terms of the executed Emergency Power Agreement (EPA), tax waiver/exemption is a condition precedent for the achievement of commercial operation date.” Read Full Story