In 2015, Ghana’s Parliament enacted the Energy Sector Levies Act (ESLA), Act 899, a legislative measure designed to address the nation’s escalating energy sector debts and ensure a stable power supply. This Act introduced a series of levies on petroleum and power consumption, including the Energy Debt Recovery Levy (GH¢0.41/liter), Price Stabilisation and Recovery Levy (GH¢0.12/liter for petrol, GH¢0.10/liter for diesel), Energy Fund Levy (GH¢0.01/liter), and Road Fund Levy (GH¢0.40/liter) for the petroleum sector, as well as the Public Lighting Levy (5% per kilowatt-hour) and National Electrification Scheme Levy (5% per kilowatt-hour) for the power sector. These levies formed the initial price build-up, aimed at mitigating financial shortfalls in the energy sector.
Since its inception, the ESLA has undergone three amendments, reflecting evolving fiscal and energy priorities. The first amendment, in 2017 (Act 946), reduced the Public Lighting Levy to 3% and the National Electrification Scheme Levy to 2% per kilowatt-hour of electricity consumed, with the objective of making electricity more affordable for Ghanaians. In 2019 (Act 997), the second amendment revised the Price Stabilisation and Recovery Levy, Energy Debt Recovery Levy, and Road Fund Levy to align with economic demands.
The third amendment, in 2021 (Act 1064), introduced the Energy Sector Recovery Levy to support capacity charges and feedstock costs, alongside the Sanitation and Pollution Levy to address environmental concerns. Notably, the 2021 amendment process was marked by commendable engagement from the Minister of Energy, who consulted extensively with stakeholders to ensure transparency and alignment with sector needs.
As a result of these amendments, the petroleum sector levies now stand at: Energy Debt Recovery Levy (GH¢0.49/liter), Price Stabilisation and Recovery Levy (GH¢0.16/liter for petrol, GH¢0.14/liter for diesel), Energy Fund Levy (GH¢0.01/liter), and Road Fund Levy (GH¢0.48/liter). For the power sector, the Public Lighting Levy and National Electrification Scheme Levy remain at 3% and 2%, respectively. These adjustments have shaped the current price build-up, culminating in the 2025 introduction of an additional GH¢1 per liter fuel levy, further increasing the financial burden on consumers.
The GH¢1 Fuel Levy: Purpose and Concerns
The reality of the matter is that the newly approved GH¢1 per liter levy, recently passed, is primarily intended for the purchase of fuel or liquid to sustain power generation, rather than for servicing energy sector debts as initially claimed. As stated by the Minister of Finance, the levy aims to generate between GH¢5 billion and GH¢6 billion to address the persistent “Dumsor” (power outage) crisis by ensuring fuel availability for power plants.
However, the big issue is the frequent indiscretion of every government of always moving the funds in the accounts as provided by Section 3, 4 & 5 of Act 899 to the Consolidated Fund is very worrying. Such acts by governments undermines transparency and accountability. An escrow account could provide demonstrable evidence that the levy is being used as intended, reassuring the average Ghanaian of what their contributions are used for.
To build public trust, the government must establish clear, transparent mechanisms to ensure that this particular levy is used for what it is been intended and as promised through Section 6 of Act 899.
The Burden on Ghanaians
The cumulative effect of fuel levies places a significant burden on the average Ghanaian. Over the past eight years, levies on petroleum products increased by 50 pesewas, a gradual rise that, while notable, was spread over time with the various amendments. In contrast, the addition of GH¢1 within the first six months of 2025 is a sharp escalation, particularly for a population already grappling with rising living costs.
Before the passing of the new levy of GHS 1 on every litre of fuel, the total amount of levies, tax and margins the average Ghanaian was paying was about GHS 3.27. One issue worth noting is that this surreptitious levy seems to be a back stab to the commercial vehicle drivers and owners. With that being said, it is trite that it is the passengers who will be at the receiving end.
The absence of a sunset clause in this amendment and levy further exacerbates concerns. Without a clear end date, Ghanaians face the prospect of indefinite fuel price increases, with no assurance that the energy sector’s challenges will be resolved. Including a sunset clause in the legislation could provide relief, signaling to citizens that the levy is a temporary measure tied to specific, measurable outcomes, such as securing stable power generation.
A Path Forward
The persistent use of fuel levies to address Ghana’s energy sector challenges, from the 2015 Energy Sector Levies Act to the recent additional GH¢1 levy, underscores a troubling reliance on consumers and the average Ghanaian to bear the cost of systemic issues. While the latest levy is intended to secure fuel for power generation, its integration into the Consolidated Fund and lack of a sunset clause erode public trust. No one is against taxation, but public trust is low because of lack of accountability.
There must be accountability in how our taxes are utilized, as mandated by Section 6 of the ESLA Act, Act 899, which requires transparent reporting on levy proceeds. A GH¢1 levy on a liter of fuel is substantial, adding to the financial strain on citizens. Governments must engage in deep consultations with major stakeholders, including transport unions and consumer groups, rather than passing bills that affect citizens’ pockets surreptitiously.
Furthermore, the government should broaden its tax net to include diverse revenue sources, reducing the overreliance on petroleum products. It is rather unfortunate that our part of our world is not geared towards promoting and meeting the Sustainable Development Goals, particularly Goal 7 on affordable and clean energy. Government needs to show efforts and must prioritize providing accessible energy solutions rather than burdening citizens with heavy energy levies.
The Electricity Company of Ghana (ECG) faces substantial operational challenges, with distribution losses averaging 30%. For every 100 units of power received from upstream sources, approximately 30 units remain unaccounted for, undermining the company’s financial viability and exacerbating the burden on taxpayers.
These losses arise from technical inefficiencies, commercial shortcomings, and corrupt practices, including illegal connections. Without urgent reform, ECG’s inefficiencies will continue to drain public resources and hinder progress toward affordable and reliable energy. Immediate action is necessary to curb mismanagement, address corruption, and safeguard taxpayer resources, ensuring that Ghana moves toward a future of accessible and sustainable energy without overburdening our fuel with levies and tax.
Source: Andy Darko, a Petroleum Engineer and Business Development Analyst
