Fuel levy: No more bailouts without accountability – Prof. Kwaku Asare

Professor Kwaku Asare, a legal practitioner and governance advocate, has spoken out about the new GH¢1 per litre levy on petroleum products. He warns that without accountability and reform, this policy may just bail out elite failures.

In a Facebook post titled “Pair the Levy with Reform & Accountability,” he highlighted Ghana’s urgent financial issues. The energy sector faces a $3.1 billion debt burden and rising thermal fuel costs. These expenses are not reflected in current electricity tariffs.

Prof. Asare noted that the government’s proposed amendment to the Energy Sector Levies Act (2025) aims to stabilize the sector. However, he believes an important element is missing.

Levy Alone Not Enough

The new levy could raise GH¢5–6 billion, covering 60% of this year’s thermal fuel needs. This may help prevent blackouts and avoid steep electricity tariff hikes. It could also restore Ghana's credibility with development partners.

However, Prof. Asare cautioned about social costs for ordinary citizens. The levy reduces purchasing power and adds pressure on households and businesses, especially affecting the poor. He stated that this crisis resulted from inflated contracts and misuse of previous energy levies.

A Reform Blueprint

Kwaku Azar proposed a three-part framework to pair the levy with reforms:

1. Accountability First
- Conduct a forensic audit of energy spending over the past decade.
- Prosecute those involved in corruption.
- Recover misappropriated funds and blacklist corrupt suppliers.

2. Transparent, Targeted Use
- Use proceeds strictly for fuel procurement and debt repayment.
- Require quarterly public reports on collections and expenditures.
- Tie funding for state-owned enterprises to performance metrics.

3. Structural Reform and Fiscal Discipline
- Gradually adjust tariffs to reflect actual energy costs.
- Renegotiate unfavorable Independent Power Producer contracts.
- Increase investments in renewable energy sources.
- Make the levy time-bound with measurable targets.
- Require parliamentary reauthorization every two years.

Call to Action

“The levy may be necessary but is not sufficient,” Prof. Asare emphasized. He urged both ministries to present a credible plan that restores power supply and public trust.

“This is not just about raising revenue; it’s about restoring trust,” he concluded.

Background

The Energy Sector Levy (Amendment) Bill, 2025 introduces a GHS1 increase in petroleum product levies. This measure aims to generate an additional GHS5.7 billion annually for reducing energy sector debts.

Finance Minister Dr. Cassiel Ato Forson announced this fuel levy as part of efforts to close financing gaps in thermal fuel procurement. While officials claim it won’t raise pump prices due to favorable exchange rates, public debate continues.

The Ghana Private Road Transport Union (GPRTU) criticized the government’s decision as detrimental to their operations. Alhaji Abass Imoro expressed disappointment over lack of consultation before implementing the levy hike.

He noted that professional drivers rely heavily on fuel prices for their livelihoods, stating that one cedi per litre significantly impacts them. Imoro called for better engagement with drivers regarding such decisions moving forward.