Adnan Adams Mohammed
Amidst the government’s decision to postpone the implementation of the controversial Energy Sector Shortfall and Debt Repayment Levy (Amendment) Bill, 2025 indefinitely, due to current tension building up between Israel and Iran, the International Monetary Fund (IMF) has described the levy as a strategic policy aligned with the country’s fiscal goals under the Extended Credit Facility (ECF) programme.
The new levy, whose implementation date was postponed to June 16, 2025 from its initial date of June 9, to allow time for critical stakeholder consultation, especially with the Chamber of Oil Marketing Companies, will charge GH¢1.0 per litre on selected petroleum products.
According to the government, the levy aims at addressing long-standing debt and financial shortfalls in the energy sector. However, many Ghanaians including transport operators, businesses and ordinary citizens have strongly opposed the levy, raising red flags on the grounds of no consultation and awareness education. But the IMF thinks otherwise.
“On the fuel levy, what I can say is that this is a new measure that will help generate additional resources to tackle the challenges in Ghana’s energy sector, and it is also going to bolster Ghana’s ability to deliver on the fiscal objectives under the programme,” Julie Kozack, Director of IMF’s Communications Department said at a press briefing last week.
“The revenue measure will play a crucial role in helping Ghana tackle structural issues in the sector while supporting broader fiscal reforms.”
According, Richmond Rockson, the Spokesperson and Head of Communication for the Ministry of Energy and Green Transition in an interview, over the weekend, explained that the decision is influenced by recent fluctuations in global oil prices.
Meanwhile, the Founding President of IMANI Africa, Franklin Cudjoe, has described the government’s decision to suspend the implementation of the Fuel Levy as a “sensible” and timely move, given the looming global oil price hikes driven by Middle East tensions.
Reacting to the Ghana Revenue Authority’s (GRA) directive to indefinitely postpone the rollout of the GH¢1 per litre levy, Cudjoe said on Facebook that the government was right to step back and reassess the potential economic impact before proceeding with such a policy.Ghanaian tourism
“As oil prices are set to rise due to tension in the Middle East, the government must assess the situation and likely impact before rolling out the GHS 1 ‘dumsor’ levy,” he wrote.
Cudjoe further urged the government to respond to the looming crisis by fast-tracking domestic oil production, investing recent foreign exchange and gold windfalls wisely—particularly in agriculture—and recovering stolen public funds from the last eight years to reinvest in economic buffers.
The levy has unsurprisingly drawn criticism from the Minority in Parliament, who argue that it adds to the cost burden on already struggling consumers.
Meanwhile, the government insists the impact on consumers will be marginal, pointing to current fuel prices at the pump, which it says remain lower than in previous high-inflation periods.
The amended Bill, passed under certificate of urgency is expected to generate an estimated GH¢5.7 billion in revenue to help sustain the energy sector deeply wallowing in a debt that has a potential to collapse the energy sector.
However, major stakeholders have expressed disappointment at the government over immediate passage of such a Bill, which has the potential to have an overriding cost increase effect on all aspects of the economy – thereby affecting cost of living and doing business – without consultation.
Commercial transport operators had previously threatened to embark on a nationwide strike on June 10, 2025, in protest against the newly introduced levy. According to the Ghana Private Road Transport Union (GPRTU), the decision to implement the levy was taken without adequate consultation and risks pushing many operators out of business due to rising operational costs.
Abass Ibrahim Imoro, Public Relations Officer of GPRTU said initially during a press event while reacting to the development “We are therefore calling on the government to reverse the levy immediately and engage us and stakeholders on the way forward. In the event that our call is not heeded, we will be compelled to take industrial action and park our vehicles on June 10, 2025. We urge the government to consider the impact of the levy on the transport sector and the consequences of our action on the economy, and engage us in meaningful deliberations to help address challenges in the energy sector,”
President John Dramani Mahama however has assured Ghanaians that the new levy will not lead to an immediate increase in fuel prices at the pump.
“Our energy sector is saddled with over US$3.1 billion in debt, and we require an additional US$1.8 billion to ensure a continuous fuel supply for thermal power generation in the coming months,” he noted. “If we fail to act decisively, we risk a collapse that would threaten national productivity and industrial progress.”
The President emphasised that the levy forms part of a broader, urgent strategy to rescue the country’s struggling energy sector and ensure consistent electricity supply.
He acknowledged the concerns of Ghanaians but stressed that the decision was made after careful consideration of its potential impact on households and businesses.
“With the recent gains in macroeconomic stability and the strengthening of the cedi, this levy is not expected to result in any immediate fuel price increases,” he said.
“We fully understand the challenges facing citizens, and this intervention was not undertaken lightly.”
President Mahama further revealed that the estimated GH¢5.7 billion in revenue from the levy will be strictly allocated to settling longstanding energy sector debts, financing fuel procurement, and preventing future power shortages.
To ensure accountability, the funds will be ring-fenced, independently audited, and excluded from the Consolidated Fund. Audit reports will also be made public to enhance transparency.
The President’s appeal has received mixed reactions from stakeholders and across social media platforms. While some have applauded the initiative as a bold and necessary step to revamp the energy sector, others remain skeptical, fearing it could eventually translate into increased costs for consumers.
The Independent Power Generators, Ghana (IPGG), has thrown its support behind the government’s introduction of the GHc1 Energy Sector Levy, describing it as a necessary and urgent measure to address the country’s growing energy sector debt.
“This policy intervention is both necessary and time-sensitive, given the precarious financial state of the sector. It must be stated with clarity and conviction that the current accumulation of debt, now significantly compounded and overdue, was entirely avoidable. The sector’s distress, which affects power producers, fuel suppliers, and system reliability, is a direct consequence of the mismanagement and misapplication of previously established Energy Sector Levy and bond proceeds and loans”, the Chief Executive Officer of IPGG, Dr. Elikplim Kwabla Apetorgbor, has said in a statement while acknowledging that the levy was crucial to restoring financial stability within the power sector.
Conversely, the Chamber of Oil Marketing Companies (COMAC) has cautioned that the levy could push many downstream petroleum businesses toward insolvency and derail clean energy targets in the country.
The levy applies to petrol, diesel, LPG, naphtha, fuel oil and marine gasoil, raising the cumulative tax burden from 22% to 26% of the ex-pump price according to the oil marketers.
“The cumulative impact of rising taxes, limited margins, and increasing financial obligations threatens the sustainability of many OMCs and LPGMCs within the sector,” Dr. Riverson Oppong, CEO and Industry Coordinator of COMAC said in a press statement.
A significant number of OMCs/LPGMCs are already burdened by debt, and further fiscal pressure could lead to widespread insolvency, job losses, and broader economic disruption”, he added.
“Any future rise in international Brent crude prices will compound cost pressures. With limited flexibility, marketers would be forced to pass on higher costs to consumers—potentially triggering up to a 5% drop in demand, especially among smaller players,” COMAC added.
Also, Chief Executive Officer of the Ghana National Chamber of Commerce and Industry (GNCCI), Mark Badu-Aboagye, has indicated that the government has not provided enough of a buffer before reintroducing cost pressures at the pump.
“The intended purpose of the levy is very relevant in supporting the energy sector and addressing its mounting debt. However, I take issue with both the timing and the rate of the increase. The rate of about 8% of the current price per litre is quite high”, he said at the launch of the 5th Chamber Business Awards.
“We’ve only recently started enjoying some relief from lower fuel prices, just about a month ago. Considering the financial strain consumers have faced, there should have been a grace period before any additional burden was introduced.”
GNCCI President Stephen Miezen added that the private sector is willing to partner more closely with the government to drive sustainable growth, reduce imports and expand local production, but such collaboration requires mutual respect and strategic engagement.
“The private sector is eager and prepared to collaborate with the government to boost production, reduce imports, and expand exports. For this to be effective, there must be deeper engagement, shared goals, and a strong mutual commitment between policymakers and the business community” he has asserted.
