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President Mahama Energy levy was to help pay VRA's debts

Fuel prices at the pumps went up by between 22 percent and 27 percent, following the passage of the energy sector levy by parliament in December 2015.

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President John Mahama has said the energy sector levy was introduced to help the Volta River Authority (VRA) pay off its legacy debts.

Parliament last year passed the energy sector levy which saw an astronomical increases in taxes and subsequently affected prices of petroleum products.

Fuel prices at the pumps went up by between 22 percent and 27 percent, following the passage of the energy sector levy by parliament in December 2015.

The price of LPG also went up by about 18 percent.

However, in a recent TV interview, president Mahama said the levy was to also clean VRA's debts and help it sustain the power they are generating.

“Naturally, VRA itself has a lot of legacy debts the debts of VRA and the power utilities have accumulated over the years and that’s why one of the solutions to the energy crisis was not only putting in enough power generations, he told TV3.

"But also to do something about the VRA’s debt hence introducing the energy sector levies to help them pay off those legacy debts, clean their balance sheets so that they are better able to sustain the power that they are generating,” he said.

President Mahama in his State of the Nation address described the decision as tough but necessary.

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