President John Dramani Mahama has reiterated the government's decision to clear the accumulated legacy debts in the power sector with part of the revenue generated from the GHC1 fuel levy yet to be implemented.

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

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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 West African Gas Pipeline.

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

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Government is set to implement the Energy Sector Levy (Amendment) Bill, 2025, which introduces a GH¢1.00 petroleum levy, following approval by Parliament on Tuesday, June 3.

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The Majority side of the House approved the bill after the Minority side staged a walkout.

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

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He noted that the timing of the introduction of the levy is apt as the cedi continues to appreciate against major trading currencies.

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The minister projects to generate revenue ranging between GH¢5 billion and GH¢6 billion to support the procurement of liquid fuel.

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"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," he explained.

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"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.

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Despite the projected revenue government seeks to rake, the Energy Minister noted that the government will still need to push in more finances to address the country's energy sector crisis.

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"This amount, if you look at the object clearly, we talked about the debt that we have and how unsustainable the debt is."

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“So, even with this GH¢1, the Finance Minister will still have to assist us in getting some additional money to buy liquid fuel,” Mr Jinapor said in an interview on Citinews.

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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.

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“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."

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"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.

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

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“This approach is not only tired but unfair,” Nsiah said. “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.”

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About Ghana’s energy crisis

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Ghana is currently facing a severe energy crisis, evident in the frequent power outages, financial struggles, and fuel shortages. The government is urgently seeking GH₵1.1 billion for fuel procurement.

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The Electricity Company of Ghana (ECG), on the other hand, is facing a monthly deficit of GH₵2 billion due to poor revenue collection, making it difficult to pay independent power producers, who have threatened to suspend operations.

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Two weeks ago, the Ministry of Energy confirmed the arrival of 450,000 barrels of fuel to support power generation at a time stakeholders project imminent power outages.

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Head of Communications at the Energy Ministry, Richmond Rockson, who engaged the media in an interview noted that the challenge before his outfit is financing to procure more barrels of fuel.

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“The only challenge is financing because when you look at the tariff structure, fuels are not part of the tariff structure, so every now and then, we have to fall on the Ministry of Finance to make provisions for funding,” he said.

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Per reports, the barrels of fuel recently purchased are likely to last no more than 16 days. That sets June 4, as the next critical date by which new fuel must arrive, or the country might experience electricity generation shortfall.

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