Overview of the energy, extractives and infrastructure sectors for the year 2023
Ghana's Minister for Finance in the 2024 Budget Statement and Economic Policy (the 2024 Budget), stated that 2023 was a year of economic stabilisation and recovery for the country following government's negotiation and commencement of an International Monetary Fund (IMF) Extended Credit Facility (ECF) programme, debt restructuring, among other reforms and programmes.
Notable events in the energy and extractives sectors for 2023 included the relocation of the Ameri power plants to Kumasi; completion of phase 1 of the construction of the Early Power Project; granting of the country's first lithium mining lease; introduction of the Gold for Oil (G4O) policy; the pouring of first oil from the Jubilee South-East area offshore Ghana, which is expected to add 300,000 barrels of oil per day (bopd) to production from the Greater Jubilee field, resulting in an aggregate production of over 100,000 bopd; the acquisition by Africa Finance Corporation (AFC) of Aker
Energy's interest in the Deep Water Tano/Cape Three Points (DWT/CTP) block; government's approval of the plan of development in respect of the Pecan discovery in the DWT/CTP block; and the plugging of all 6 wells designated for the decommissioning of the Saltpond oil field.
In the infrastructure sector, several construction projects and programmes relating to sanitation and water resources, works and housing, roads and highways, railway development, communication and digitalisation, and transport, were either commenced, progressed or completed. These included the:
- launching of the electric vehicle policy;
- development of a water safety plan by the Ministry of Sanitation and Water Resources;
- commencement of the implementation of the National Rental Assistance Scheme; progression with phase 2 of the Tema Motorway Roundabout project;
- completion of several priority infrastructure projects under the Sinohydro deal; and
- construction of an oil and gas services terminal to serve as a one-stop shop logistics support base for offshore oil and gas operations as part of the strategic development of the Takoradi Port.
In terms of legislation, the laws relevant to the energy, extractives and infrastructure sectors that came into force in 2023 are:
- Value Added Tax (Amendment) Act 2023 (Act 1107) – amended the Value Added Tax Act, 2013 (Act 870) to provide for a 5% flat rate on the rental of commercial premises other than commercial rental establishments; provide for a 5% flat rate of tax on the supply of immovable property by an estate developer; extend the zero tax rate for locally manufactured textiles and vehicles; introduce a zero rate for locally manufactured sanitary towels; waive the tax on electric vehicles for public transportation; review the exemptions for specified goods and services and provide for related matters;
- Stamp Duty (Amendment) Act, 2023 (Act 1109) - amended the Stamp Duty Act, 2005 (Act 689) to review the stamp duty rates on specified instruments to reflect current economic realities;
- Income Tax (Amendment) Act, 2023 (Act 1094) - amended the
Income Tax Act, 2015 (Act 896) to
- revise the rates of income tax for individuals and introduce an additional income tax bracket;
- introduce a withholding tax rate on the realisation of assets and liabilities and on winnings from lottery;
- revise the treatment of foreign exchange losses and unrelieved
losses; -revise the upper limits for the quantification of motor
vehicle benefits and provide for related matters;
- Income Tax (Amendment) (No.2) Act, 2023 (Act 1111) - amended the Income Tax Act, 2015 (Act 896) to revise the rates of income tax for individuals;
- Growth and Sustainability Levy Act, 2023 (Act 1095) - imposed the Growth and Sustainability Levy to raise revenue for the growth and fiscal sustainability of the economy and to provide for related matters. The levy is imposed on upstream and downstream petroleum companies, mining companies, support services companies, and all other businesses; and
- Emissions Levy Act, 2023 (Act 1112) – imposed an emissions levy on carbon dioxide equivalent emissions from internal combustion engine vehicles and specified sectors including the construction, manufacturing, mining, oil and gas, and electricity and heating sectors.
Outlook and projections for the focus sectors
Given the modest levels of recovery experienced by the Ghanaian economy in the past year, the government has indicated that it intends to launch a recovery, stability, and growth programme in 2024. We expect this agenda to largely influence economic activities this year, notably in the energy, extractives, and infrastructure sectors. However, we anticipate that the upcoming 2024 general elections will have a significant impact on government spending for the year.
Additionally, we would expect that the ongoing IMF programme would significantly impact the relevant aspects of the economy such as production, distribution and consumption of goods and services in the energy, extractives and infrastructure sectors, as would the global efforts at energy transition, as was noted in our outlook for 2023.
Our outlook and projections for 2024 are discussed below under commercial and legal/regulatory and policy headings.
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