The International Perspective for Policy and Governance (IPPG) has raised serious concerns over the recent passage of the Energy Sector Levies (Amendment) Bill, 2025, which introduces an additional GHS 1 Energy Sector Shortfall and Debt Recovery Levy (ESSDRL) per litre of fuel.
The group warns that the levy, enacted without adequate public consultation, undermines fiscal accountability and could derail Ghana’s clean energy transition.
Lack of Stakeholder Engagement Weakens Policy Credibility
The swift approval of the levy, with minimal input from civil society, industry stakeholders, and the public, represents a failure in participatory governance. IPPG notes that inclusive policy making is critical to maintaining public trust, especially as fuel taxes now exceed 26% of the ex-pump price, despite recent fuel price reductions due to the cedi’s appreciation.
“Trust is built not only on outcomes but on the transparency and inclusiveness of policy processes, and in this case, that was lacking,” said Mr. Seth Owusu-Mante, IPPG Research Fellow. The group echoes civil society concerns that the rushed process violates democratic governance principles.
Contradiction to Clean Energy Goals
IPPG highlights a major policy inconsistency: the levy’s extension to Liquefied Petroleum Gas (LPG), despite Ghana’s push for 50% LPG adoption by 2030 under the Cylinder Recirculation Model (CRM). This move risks:
– Discouraging low-income households from switching to clean cooking fuels.
– Reversing gains in reducing charcoal and firewood dependency.
– Undermining Ghana’s climate commitments under the SDGs and Nationally Determined Contributions (NDCs).
Persistent Energy Sector Debt Despite ESLA Revenues
Since its inception a decade ago, the Energy Sector Levies Act (ESLA) has imposed multiple taxes on petroleum products, yet Ghana’s energy sector remains in fiscal distress.
“Nearly a decade after ESLA’s enactment, Ghana’s energy sector remains burdened by deepening indebtedness. Despite substantial revenue, the sector is still financially unstable due to government inefficiencies. This raises serious questions about ESLA’s effectiveness as a debt management tool,” Owusu-Mante noted.
IPPG’s Recommendations for Accountability
While the levy is unlikely to be revoked, IPPG urges the government to:
1. Conduct an ex-post Regulatory Impact Assessment (RIA) to evaluate socio-economic effects, including impacts on inflation, oil marketing companies, and LPG adoption.
2. Introduce a sunset clause with regular reviews to ensure the levy is time-bound and performance-based.
3. Institutionalize stakeholder engagement in energy policy making to restore public trust.
4. Address systemic inefficiencies in the energy sector rather than relying on recurring levies as a stopgap measure.
IPPG calls for greater transparency, accountability, and policy coherence to ensure Ghana’s energy sector reforms align with sustainable development and climate goals. Without corrective action, the new levy risks exacerbating financial strain on citizens and undermining long-term energy transition efforts.
