Editorial: Is the fuel levy hike justified?

Ghana faces two major challenges: debts to Independent Power Producers (IPPs) and under-recovery of power costs.

Dr. Donkor warned that this under-recovery threatens the sector's financial health.

Dr. Riverson Oppong Peprah, CEO of the Association of Oil Marketing Companies (AOMCs), noted shrinking margins for oil marketing companies. He emphasized that the downstream sector is heavily burdened by significant levies, including ESLA, which fund energy sector debts.

Energy Minister John Jinapor stated that a new GH¢1 fuel levy could generate between GH¢5 billion and GH¢6 billion. This amount will still be insufficient to meet the needs of the energy sector.

He believes the levy is necessary to tackle Ghana’s growing energy debt. However, some civil society organizations oppose the new fuel levy. They call it regressive and harmful to consumers already facing financial strain.

Finance Minister Dr. Cassiel Ato Forson reported that energy sector debt is currently at US$3.1 billion. To clear all arrears, US$3.7 billion is needed, plus an additional US$1.2 billion for fuel procurement in 2025.

Dr. Forson also thinks that increasing the levy won't raise ex-pump fuel prices. Meanwhile, the Minority Caucus in parliament walked out during the approval process for this levy.