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The Ghanaian government passed a bill in June 2025 imposing a GH¢1.00 levy on each litre of petroleum products to shore up the ailing power sector. Finance Minister Dr. Cassiel Ato Forson said this “energy sector levy” is meant to raise roughly GH¢5.7 billion annually to clear debts and purchase fuel for power plants.
He explained that Ghana’s energy sector is “heavily indebted” (about US$3.1 billion as of March 2025) and needs extra funding to meet obligations to independent power producers, oil suppliers, and state utilities. Forson insisted the GH¢1 charge is essential to help end the intermittent power outages (the so-called “dumsor”) and stabilise the electricity supply. He and the Energy Minister, John Jinapor, noted that recent drops in world oil prices and a stronger cedi mean consumers may not feel an immediate pump price increase. Jinapor pointed out that petrol has fallen from about GH¢16 to GH¢13 per litre, so even with the levy, “the net effect is that you are still having a reduction of GH¢3.00 on a litre of fuel.” Both Forson and Jinapor assured Ghanaians that gains from the appreciating cedi will absorb the levy’s cost, so simulations show no rise in ex-pump prices for petrol or diesel in the next pricing window.
How the Levy revenues will be used
The government says the new fuel tax revenues will be ring-fenced for the power sector. Officials list key uses, including:
- Reducing power-sector debts: Pay down legacy arrears owed to power producers, fuel suppliers, and other energy companies.
- Purchasing fuel for power generation: Procure essential liquid fuels for Ghana’s thermal power plants to ensure they run and avoid outages.
- Upgrading infrastructure and operations: Invest in grid and plant infrastructure, technical upgrades, and energy reforms to improve reliability.
Energy Minister Jinapor emphasised that levy proceeds would be directed toward “vital infrastructural and operational needs” in the energy sector to ensure a reliable power supply. The government frames the GH¢1 levy as a temporary emergency measure to inject funds into the power system, supplementing existing Energy Sector Levies and budgeted allocations.
Political Reactions
Ruling Party (NDC) Support: The governing NDC has defended the levy as unavoidable. Deputy Government Spokesperson Shamima Muslim urged Ghanaians to “bear with” the tax, noting Ghana now has over $3 billion in energy debts that demand urgent financing. She highlighted that the cedi is appreciating, inflation is moderating, and pump prices have fallen, making it an opportune time to collect the levy.
“Cedi is appreciating, inflation is decreasing, fuel prices are dropping, but we need funds to purchase more liquid fuels… Just 1 cedi per litre & together we will reset [the power sector].” Energy Minister John Jinapor similarly argued that the levy was delayed until fuel costs eased – “a sensitive government will not slap a tax when fuel was GH¢16.00 [per litre]” – and now remains affordable for consumers.
NPP Opposition: The main opposition, NPP, has vehemently rejected the levy. Minority Leader Alexander Afenyo-Markin denounced it in Parliament as a rebranded E-Levy, pointing out that “what is Energy? Is it not ‘E’? This is another form of E-Levy disguised as an energy sector levy,” and warned it violated a promise not to introduce new taxes. NPP legislators staged a boycott of the vote, and senior party figures accused the government of masquerading a budget shortfall as an energy fix. NPP National Organiser Henry Nana Boakye announced street protests under a “Coalition of Political Parties,” calling the GH¢1 charge a “wicked” and “obnoxious” tax.
Critics nicknamed it the “Dumsor Levy” to emphasise the pain it inflicts on motorists and traders, recalling that dumsor crises originated in past power-sector debts.
Reactions on social media and in public debate are split along similar lines. Some Ghanaians and commentators welcomed the levy as a prudent step to end power cuts, while many others condemned it as an undue burden on ordinary commuters and businesses. DUBAWA observed that opinions were “divided” online, with a number of citizens asking why a government that campaigned on “no new taxes” is now imposing one.
Civil Society and Expert Criticism
Civil society groups, analysts, and energy experts have criticised the levy as regressive and short-sighted.
The African Institute of Energy Sustainability (AIES) called it “unjust, economically flawed and socially unfair,” noting that roughly 77% of Ghana’s imported fuel is consumed by road transport, not power plants. Dr. Samiu K. Nuamah (AIES Executive Director) warned that the tax would push total fuel-related levies above 33% of the pump price, driving up the cost of goods and services. He and others pointed out that the new levy does nothing to address the underlying problems – unfavourable energy contracts, inefficiency, and poor sector management – and urged the government to focus on structural reforms instead of introducing new taxes.
Dr Riverson Oppong, energy economist and lecturer at the University of Energy and Natural Resources, told DUBAWA the levy “fails to offer a sustainable policy fix,” arguing that past energy taxes have been plagued by mismanagement and weak transparency. “If we’re going to impose another tax on citizens, there must be safeguards — not just ring-fencing on paper but independent audits, quarterly reports and a timeline for repeal,” he said.
Kwasi Yamoah Boadu, policy lead at the Ghana Institute of Public Finance and Policy, was similarly critical. “This levy is a stopgap, not a solution. The danger is that it becomes permanent while the underlying inefficiencies in procurement and power generation remain untouched,” he told DUBAWA. He added that the timing, when many Ghanaians are struggling with cost-of-living pressures, raises serious concerns about equity.
Economic Impact and Public Concerns
Experts warn the levy will have tangible economic side effects. Fuel and transport costs: An extra GH¢1.00 per litre represents roughly an 8% fuel price increase, which transport unions say will be passed through in higher bus fares and goods prices.
Analyst Isaac K. Essel notes this hike “will ripple across sectors – transport, agriculture, and commerce – raising the cost of goods and services.” AIES and others similarly point out that since most fuel goes into road transport, ordinary commuters and businesses will end up shouldering most of the burden. Fuel-dependent businesses, long-haul transporters, and farmers are particularly concerned about shrinking margins.
Inflation: Ghana’s inflation rate (around 18–19% in mid-2025) has recently eased partly due to falling fuel and transport costs. Analysts warn that the new levy could stabilise or even raise inflation by keeping fuel costs higher than they would otherwise be. Energy analyst Kwadwo Poku calculated that, combined with existing fuel levies, the government is effectively collecting almost GH¢2.00 per litre (about US$0.30) in taxes. He estimated that this extra tax would net roughly GH¢1 billion per year from motorists, deepening the financial strain on consumers already coping with high electricity and living costs.
Regressive burden: Critics emphasise the levy’s regressive impact. Poor and rural households spend a larger share of their income on fuel and transport, so they “feel the pinch more acutely” from any fuel tax. There is also a trust deficit – many cite reports that past energy levies lacked transparency, fueling skepticism that this new revenue will be used effectively.
Taken together, these concerns suggest that while the levy is framed as a short-term rescue, its economic fallout could stoke broader discontent. Already on social media, some users are pointing to rising commodity prices and tighter household budgets in response to the tax.
Conclusion
With Parliament controlled by the NDC majority, the Energy Sector Levy Amendment Bill is now law, and the GH¢1 fuel levy will take effect immediately on all fuel sales. The opposition has vowed to continue opposing the tax through public campaigns and planned demonstrations. Transport operators and traders have warned that they will likely pass the cost on to passengers and customers if the levy is implemented. Meanwhile, citizens and civil society groups say they will closely watch how the funds are spent. Many have demanded strict accountability and a sunset clause for the levy.
