The government has withdrawn its long-standing subsidy on marine gas oil (MGO) used by non-artisanal fishing fleets, triggering a sharp increase in the pump price of the fuel from 23 pesewas to GH¢1.93 per litre.
The policy change, announced by Finance Minister Dr Cassiel Ato Forson during the presentation of the 2025 Mid-Year Budget Review to Parliament, is expected to generate GH¢71 million in additional revenue for the state.
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The decision, now backed by law following the passage of the Energy Sector Levies (Amendment No. 2) Bill, 2025, is a major shift in Ghana’s energy subsidy regime.
The new GH¢1 levy on petroleum products also affects MGO.
End of subsidy targets abuse, smuggling
Dr Forson explained that while the subsidy was originally intended to support the maritime sector—particularly fishing trawlers and maritime security operations—it had instead created perverse incentives for fraud and illicit fuel trade.
“Over the years, this subsidy has been severely abused, with subsidised MGO being smuggled into the open market,” the Minister said, estimating that the nation had lost nearly GH¢500 million in revenue due to such practices.
The withdrawal, he added, is part of broader efforts to “curb the erosion of tax revenue and reduce fiscal risks to the budget.”
According to the Ministry of Finance, the removal of MGO from the list of exempted products under the Energy Sector Levies Act will help plug leakages in the system and ensure fairer application of energy taxes across sectors.
It is also expected to improve transparency and accountability in the fuel distribution chain.
Parliament approves new levy framework
The Energy Sector Levies (Amendment No. 2) Bill, 2025, which Parliament passed provides the legal basis for the removal of the MGO subsidy.
It amends the scope of the Energy Sector Levy by incorporating marine gas oil into the levy framework, ending years of tax waivers granted to non-artisanal marine fuel consumers.
Notably, the government has clarified that this measure does not apply to premix fuel used by artisanal fishermen.
Supplies of premix to small-scale fishing communities will remain unaffected, maintaining protection for low-income livelihoods in the coastal sector.
Industry players back move
The withdrawal of the subsidy has received support from the Chamber of Oil Marketing Companies (COAMC), which has long called for reforms in MGO pricing.
According to the Chamber, the continued subsidy on MGO had encouraged illegal resale and undermined retail market integrity.
In previous statements, COAMC warned that some unscrupulous actors had been diverting subsidised marine gas oil into private retail networks for personal gain.
The Chamber estimates that scrapping the subsidy could save the country millions of cedis while restoring order in the sector.
Promoting fairness
The Ministry of Finance believes that the inclusion of MGO under the GH¢1 Energy Sector Levy will help promote a fair and equitable energy regime.
It also aligns with the government’s broader fiscal consolidation agenda and its commitment to tackling inefficiencies and corruption in public spending.
Dr Ato Forson assured Parliament that the removal of the subsidy was not intended to punish the maritime industry but to bring about a more sustainable and transparent energy market.
The audit trail for MGO distribution and pricing will now be subjected to tighter scrutiny, as authorities move to enforce compliance and monitor the impact of the reform.
