A senior Research and Policy Analyst at the Institute for Energy Security (IES), Smith Prosper Boahene, has noted that it would be ‘premature’ for the government to scrap the GH₵1 fuel levy amid growing calls for its abolition.

Addressing the media on Wednesday, March 25, explained that although there's a recent drop in global oil prices, it will be dangerous for the government to scrap the levy.

He added that the GH₵1 fuel levy is crucial to Ghana’s energy sector which is already at the verge of collapsing.

“IES from the commencement has been against it; that call is premature.The levy is there to serve a very critical purpose… to replenish the debt that has been accumulating in the sector,” he added.

The researcher argued that calls should rather be directed towards the temporary suspension of the Price Stabilisation and Recovery Levy (PSRL) to help reduce fuel prices and ease the burden on consumers.

Meanwhile, global crude oil prices have dipped by about 5%, falling from around $104 per barrel to approximately $98.95, while gas prices in Europe have also declined by roughly 8%.

Last year, the President John Dramani Mahama government implemented GH¢1 fuel levy on petroleum products. This move comes under the Energy Sector Levies (Amendment) Act, 2025 (Act 1141), which was assented to by President on June 5 to settle energy sector shortfalls, reduce legacy debts, and stabilize power supply across the country, following parliamentary approval.

The government insists the levy is crucial for the financial recovery of Ghana’s energy sector. President John Mahama, while speaking at the presentation of the final report of the National Economic Dialogue 2025 on June 4, announced the government's decision to clear the accumulated legacy debts in the power sector with part of the revenue generated by the yet-to-be-implemented levy.

He stated that "initially much of this revenue will go to the purchasing of fuel to ensure stable power of electricity."

The government will also reduce the use of liquid fuel in the energy mix as it expects more gas from the ENI, Sankofa, Jubilee, and TEN fields, as well as the West African Gas Pipeline.

"At that stage, the resources generated by this increased levy will be channeled to pay accumulated legacy debts in the power sector," he added.

He assured Ghanaians that funds generated from the newly approved GHC1 fuel levy will undergo regular audits. He explained the move is to ensure accountability and transparency.

"Funds from this levy will not be subject to the hazards of the Consolidated Fund. The fund will be regularly audited and audit reports made public to ensure its transparent use."

Energy and Green Transition Minister, John Abdulai Jinapor, has defended government's move despite opposition from some stakeholders in the energy sector.

He noted that the timing of the introduction of the levy is apt as the cedi continues to appreciate against major trading currencies.The minister projects to generate revenue ranging between GH¢5 billion and GH¢6 billion to support the procurement of liquid fuel.

"Fuel was around GH¢16.00, and a sensitive government will not slap a tax when fuel is GH¢16.00. You couldn't have imposed that tax around that time when fuel was still very high, and so you needed to work to bring fuel down to this level and share the gain with Ghanaians. At that time, if we had increased it, you can imagine the impact on Ghanaians, but today, the net effect is that you are still having a reduction of GH¢3.00 on a litre of fuel.

"It is better to do it today than to (have done) it yesterday, when it would have eroded your income; today, your purchasing power has increased because of the reduction of the value of the dollar," he said while speaking on JoyFM.

Some stakeholders in the energy sector have expressed their displeasure over the approval of the Energy Sector Levy (Amendment) Bill, 2025, by Parliament and its pending implementation.

On the matter, Chief Executive Officer of the Association of Oil Marketing Companies (AOMCs), Dr Riverson Oppong Peprah, warned that the implementation of the levy could drive fuel prices higher, adding further strain on consumers and the downstream sector.

“When fuel prices began to fall, it wasn’t because the cedi gained stability; rather, it was due to a drop in plant prices caused by the decline in West Texas Intermediate (WTI) crude oil prices. Only after that did the cedi stabilise and support the downward trend."

"As we speak today, plant prices are already rising again. So, I urge the government to reconsider this levy since there are other options," he counselled.

Also, Executive Director of the Centre for Environment and Sustainable Energy Benjamin Nsiah has raised similar concerns, calling the introduction of the levy "unfair."

“This approach is not only tired but unfair. We’ve seen this playbook before. The Energy Sector Levies Act (ESLA) and the Energy Sector Recovery Levy have provided a lasting solution to the underlying issues. It’s not about collecting more. It’s about managing what’s already collected,” he added.