Ghana’s Parliament has approved a GH¢1 fuel levy per litre to tackle the country’s growing energy sector debt. The Energy Sector Levy (Amendment) Bill, 2025, introduced under a certificate of urgency, aims to generate an additional GH¢5.7 billion annually to stabilize power supply and pay off debts.
While the government assures consumers that fuel prices won’t rise immediately due to a strong cedi, critics argue this new tax could strain household budgets if economic conditions change. Here’s what you need to know about the GH¢1 fuel levy and its impact.
Why Ghana Introduced the GH¢1 Fuel Levy
The energy sector’s financial crisis has reached a critical point, with debts hitting US$3.1 billion as of March 2025. Key reasons for the GH¢1 fuel levy include:
- Clearing energy sector debts – The government owes Independent Power Producers (IPPs) and fuel suppliers.
- Funding thermal power generation – An estimated US$1.2 billion is needed for fuel to keep power plants running.
- Preventing “dumsor” (power outages) – The levy aims to ensure stable electricity supply.
Finance Minister Dr. Cassiel Ato Forson emphasized that the GH¢1 fuel levy will not immediately increase pump prices due to the cedi’s strong performance. However, experts warn that if global oil prices rise or the cedi weakens, consumers could face higher costs.
How the GH¢1 Fuel Levy Will Affect Consumers
- No immediate price hike – The government claims the levy’s impact will be offset by the strong cedi.
- Potential future increases – If fuel prices rise globally, the extra GH¢1 per litre could push costs higher.
- Impact on transport and goods – Transport operators may eventually adjust fares, affecting food and commodity prices.
The Minority in Parliament opposed the levy, calling it an unfair burden on Ghanaians. They staged a walkout during the vote, arguing that previous energy taxes (totaling GH¢29 billion since 2016) haven’t solved the sector’s problems.
Will This Levy Solve Ghana’s Energy Crisis?
While the GH¢1 fuel levy provides short-term funding, deeper issues remain. Ghana continues to rely heavily on expensive liquid fuels, as its thermal plants often use costlier alternatives instead of cheaper gas. Additionally, poor revenue collection in the energy sector persists, with many power distributors struggling with financial losses. There is also a lack of long-term reforms, as critics argue that the government frequently adds new taxes rather than addressing the structural problems at the heart of the crisis.
Majority Leader Mahama Ayariga defended the levy, urging Ghanaians to support it as a way to “end dumsor.” However, without systemic changes, this tax risks becoming permanent—just like previous so-called “temporary” levies.
What’s Next for Ghana’s Energy Sector?
The GH¢1 fuel levy takes effect immediately, but key questions remain:
- Will the government ensure transparency in how funds are used?
- Can Ghana reduce reliance on costly fuels and improve gas supply?
- Will this levy be removed once debts are cleared, or will it stay indefinitely?
Consumers should monitor fuel prices in the coming months, as economic shifts could determine whether this tax leads to higher living costs.
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