The Parliament of Ghana has passed an amendment to the Energy Sector Levies Act that was passed in March this year. The amendment which was considered by the House under a certificate of urgency, where the rules are suspended to enable the bill to be taken through all the stages of legislation usually in one day, on Tuesday night seeks to adjust the rate used to calculate the price of fuel per litre. According to the explanatory memorandum accompanying the bill, the review in the levy has become necessary due to the challenges faced by the energy sector that have reached a breaking point in the economy risking the country’s return to an era of power rationing.
“Due to non-payment of bills owed to ENI and Karpower, the World Bank International Development Association guarantee of $512 million and the Ghana National Petroleum Corporation guarantee $120 million were completely drawn down. As a result of this, the government is required to find additional amount of $632 million to restore these guarantees.”, the statement said
Ghana’s debt to the energy sector has ballooned to $3.1 billion as of March 2025. The debt includes monies owed to the Independent Power Producers (IPPs), State-owned power producers, and fuel suppliers. Additionally, the energy sector has seen a significant shift from hydroelectric to thermal sources that supplement the output coming from the hydroelectric dams in the country. The thermal plants use liquid fuel to power them however the cost for purchasing liquid fuel has not been factored into the price build-up of electricity tariff which has resulted in a significant revenue shortfall for procuring the liquid fuel. Therefore, to forestall the possibility of long-drawn periods of erratic power supply, the government decided to increase the Energy Sector Shortfall and Debt Repayment Levy which will place an extra GH¢1 on the price of petrol and diesel.
The government explained, “the levy will serve as a dedicated source of funding to the energy sector and the proceeds will be earmarked for the procurement of liquid fuel for power generation given that the current electricity tariff paid by consumers does not include the cost of fuel used for power generation.”
“The decision to increase the levy on petroleum prices is based on the need to find a balance between ensuring stable power supply, while promoting the financial sustainability of the sector.”
The legislative process sparked a heated debate on the floor of the House between the minority and majority groups who both argued their respective positions on the levy. The minority were vehemently opposed to the GH¢1 charge on petroleum products while their counterparts opposite stated their support for the increase adding that it would not inflict any hardship on Ghanaians as the cedi’s rally against major trading currencies including the US dollars absorbs the possible impact.
The deputy ranking member of the parliamentary committee on energy, Collins Adomako Mensah, accused the government of betraying Ghanaians after promising a repeal of several taxes during the electioneering campaign season. According to him, the Public Utilities Regulatory Commission had already increased electricity tariff by 14.7% at the last review over a month ago yet the government has sought to increase the levy which is not what the Party in government promised, he wondered. But the Finance Minister Cassiel Ato Forson remarked the amendment is necessary given the situation faced by the energy sector and assured the House that the revenue accrued will be used judiciously to benefit Ghanaians.