Thu. 12-June-2025
Policy Analysis by CERPA: The GHc1 Question: Is Ghana's new fuel levy a sustainable path to energy sector reform?
Ghana's energy sector has long faced significant challenges that threaten its efficiency, reliability, and long-term sustainability. A major issue confronting the sector is its accumulation of substantial debt, commonly referred to as legacy debt. These debts represent substantial unpaid obligations that have built up over time across various institutions within the sector.
The origins of Ghana’s legacy debt can be traced to the early 2000s, a period marked by rapid electrification and urbanisation. The consequences of this growing debt burden are evident in persistent issues such as intermittent power supply popularly known as ‘dumsor’. Over the years, successive governments have attempted to address the problem. Notably, the Energy Sector Levies Act (ESLA) was introduced in 2015, followed by the establishment of ESLA Plc in 2017, both aimed at restructuring and clearing the sector’s debts.
The most recent intervention is an amendment to the original ESLA. On Tuesday, June 3, 2025, Parliament passed the Energy Sector Levy (Amendment) Bill under a certificate of urgency. The bill was passed amid opposition from the minority in Parliament, who subsequently staged a walkout in protest.
The amendment introduces a GH¢1 levy on every litre of petroleum product sold in the country. According to the Minister for Finance, Dr. Cassiel Ato Forson, the levy is expected to generate an additional GH¢5.7 billion. These funds are earmarked to help reduce the country’s growing energy sector debt and to support efforts aimed at ensuring a stable and reliable power supply.
The objective of this policy paper is to examine how feasible the newly introduced energy sector levy is in managing legacy debt, along with its potential effects on the cost of living and the general living standards of the people in Ghana.
