The Government of Ghana could generate an additional GH¢400 million every month through the proposed adjustment to the Energy Sector Levies Act (ESLA), without causing an increase in fuel prices at the pump. This revenue boost would come from increasing the ESLA from 20 pesewas to GH¢1.00 per litre on petrol and diesel as announced.
Sources familiar with ongoing policy discussions indicate that the government plans to introduce the new levy during the next fuel pricing window, which begins on June 16, 2025. Thanks to favourable global oil prices and the recent appreciation of the cedi, this upward adjustment in the levy is not expected to translate into higher pump prices. This plan may be informing government’s decision to seek Parliamentary approval under a certificate of urgency, in order to fast-track the implementation of the revised levy.
Ghana currently consumes an estimated 470 million litres of petrol and diesel per month. At an incremental levy of 80 pesewas per litre, government revenue could increase by over GH¢370 million monthly, or GH¢4.4 billion annually. Industry experts who spoke to The High Street Journal indicated that fuel prices are expected to decline in the next pricing window. This anticipated drop provides an opportunity for government to introduce the new taxes without imposing additional cost burdens on consumers.
While some analysts acknowledge that the jump from 20 pesewas to GH¢ 1.00 per litre is very high, they also argue that it presents a practical way for government to generate domestic revenue. The proceeds, they say, could be instrumental in addressing the country’s ballooning legacy debt in the energy sector, which currently stands at approximately $3.1 billion.
Addressing the Legacy Debt
Ghana’s energy sector has long been plagued by a legacy debt crisis driven by under-recoveries, operational inefficiencies, and unpaid arrears. As of March 2025, this debt has reached $3.1 billion and continues to place considerable strain on the national budget. The government has initiated talks with Independent Power Producers (IPPs) and rolled out a broader strategy aimed at improving financial management and operational efficiency within the sector.
The proposed ESLA increase is one component of this strategy. ESLA was originally introduced by the previous National Democratic Congress (NDC) administration to help retire energy sector debt. However, the NDC has consistently criticised its successor for allegedly misapplying funds accrued under the levy, resulting in the persistence of the debt burden.
Calls for Transparency and Accountability
Industry stakeholders are urging government to accompany the tax increase with strong transparency and accountability mechanisms. Specifically, they are calling for monthly public reports detailing how much revenue is accrued through the levy, how much is used to settle the debt, and the balance remaining. This, they argue, would build public confidence and ensure citizen buy-in for the initiative.
Some have challenged Finance Minister Dr. Cassiel Ato Forson to take the lead in communicating these updates regularly. With clear and consistent reporting, they believe government can rally national support to clear the legacy debt over the medium term, thereby stabilising the energy sector and freeing up resources for critical sectors such as education, healthcare, and infrastructure.
Not a New Strategy
Experts also point out that this would not be the first time a government has leveraged declining fuel prices to introduce new taxes. In the past, both NDC and NPP administrations have adopted similar strategies to boost revenue without increasing pump prices. This proposed move, they argue, is a continuation of that approach—using favourable market conditions and cedi appreciation to address long-standing structural problems in the energy sector.
