In a bold move to avert what it calls an impending crisis in Ghana’s power sector, the government has introduced a new GH¢1 levy on every litre of petrol, diesel, and related petroleum products.
The proposed levy, outlined in the Energy Sector Levy (Amendment) Bill presented to Parliament, is aimed at raising critical funds to address a staggering US$3.1 billion energy sector debt that Finance Minister Dr Cassiel Ato Forson says threatens the country’s economic stability.
“The power sector is the biggest economic and fiscal risk we face presently,” Dr. Forson warned lawmakers. “It could lead to a major crisis if we fail to confront it head-on.”
The Finance Minister explained that without immediate intervention, Ghana risks further fuel shortages, unpaid bills to independent power producers, and the collapse of financial guarantees, including a US$512 million World Bank IDA guarantee and a US$120 million GMPC guarantee—both of which are fully drawn down in 2024.
“To restore these guarantees alone, the government requires an additional US$632 million,” Dr Forson said, noting that an estimated US$3.7 billion will be needed to clean up the sector’s debt in total.
With the country’s growing reliance on thermal power generation, fuel costs have surged. Yet, current electricity tariffs do not fully account for these expenses. Including fuel costs in tariffs, the Public Utilities Regulatory Commission estimates could spike electricity prices by 50%—a burden the minister said households and businesses could not afford.
“In 2025 alone, we will need US$1.2 billion just to procure fuels for thermal power. The fiscal space cannot absorb this,” Dr Forson stressed.
To bridge the funding gap, Dr Forson proposed the GH¢1-per-litre levy, assuring Parliament that this would not cause a rise in fuel prices. “Simulations show there will be no increase in the ex-pump price of petrol and diesel in the current pricing window if this levy is imposed,” he said, crediting the stability of the Ghana cedi for absorbing any potential impact.
Opposition Cries Foul
The Minority, however, rejected the proposal outright, accusing the government of introducing what they described as a rebranded version of the controversial Electronic Transactions Levy (E-Levy), which was recently repealed.
“You said in your budget that you wouldn’t introduce new taxes,” Minority Leader Alexander Afenyo-Markin told the House. “You repealed the E-Levy, and now you’re reintroducing it under the guise of an Energy Sector Levy.”
Mocking the bill’s acronym, Afenyo-Markin quipped, “What is Energy Sector Levy, short form? E-Levy. Energy starts with ‘E’. The Hansard is watching, and one day, this precedent will come back to haunt you.”
He also criticised the Finance Minister’s assurance that the levy would have no financial impact, describing it as “misleading.”
Speaker Steps In, Majority Defends
First Deputy Speaker Bernard Ahiafor stepped in to calm tensions, clarifying that the proposed fuel tax bears no resemblance to the repealed E-Levy in either purpose or mechanism.
Majority Leader Mahama Ayariga also came to the bill’s defence, framing it as a collective sacrifice to prevent the return of power outages. “It is not E-Levy,” he said. “This bill simply asks Ghanaians to contribute GH¢1 per litre of fuel to help end dumsor. We all have a part to play in fixing the power sector.”
The bill has since been referred to the relevant parliamentary committee for further scrutiny and is expected to be passed shortly.
