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Tax on a litre of fuel is now GH₵3.35

Government levies now account for a significant portion of fuel prices at the pump

admin by admin
June 4, 2025
in Local, News
0
GH₵1 tax litre

Tax on fuel

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Ghanaian consumers will now pay GH₵3.35 in taxes and levies for every litre of fuel they purchase, following the introduction of a new GH₵1 tax per litre or kilogramme of petroleum products.

This development raises the total number of fuel-related levies to eleven, sparking widespread concern over the sustainability and fairness of the country’s fuel pricing structure.

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The new tax, introduced under the Energy Sector Levy (Amendment) Bill, 2025, is aimed at addressing the country’s ballooning energy sector debt.

However, many observers warn that the additional burden on consumers may aggravate already high living costs and trigger inflationary pressures in the broader economy.

Breakdown of GH₵3.35 taxes, levies per litre of fuel

A detailed review of the National Petroleum Authority’s (NPA) official pricing formula shows that, prior to the new tax, ten existing levies accounted for GH₵2.35 per litre of fuel.

These include:

Energy Debt Recovery Levy – 49 pesewas

Road Fund Levy – 48 pesewas

Special Petroleum Tax – 46 pesewas

Price Stabilization and Recovery Levy – 14 pesewas

Sanitation and Pollution Levy – 10 pesewas

Energy Sector Recovery Levy – 20 pesewas

BOST Margin – 12 pesewas

Fuel Marking Margin – 9 pesewas

Energy Fund Levy – 1 pesewa

Distribution/Marketing Margin – 26 pesewas

New Energy Debt Recovery Levy – GH₵1

The addition of the new GH₵1 tax brings the cumulative total to GH₵3.35 per litre.

Economists and policy analysts point out that, while some of these charges are labeled as levies, they function in practice as indirect taxes that contribute to government revenue.

Defending the controversial tax, Minister for Finance Dr. Cassiel Ato Forson told Parliament that Ghana’s energy sector debt had climbed to $3.1 billion as of March 2025.

He emphasised that urgent fiscal measures were necessary to avert a collapse of the country’s power generation system.

According to the Minister, key energy producers such as ENI and Karpowership have not been paid, severely straining power supply reliability.

Ghana has already exhausted a $512 million World Bank-backed International Development Association (IDA) guarantee and a $120 million Ghana National Petroleum Corporation (GNPC) guarantee—both intended to ensure energy sector solvency.

To restore these guarantees and stabilize the sector, the government now needs an additional $632 million, Dr. Forson disclosed.

Immediate impact muted, but future uncertainty looms

While the Finance Ministry insists that the new levy won’t immediately increase fuel prices—citing recent gains in the value of the Ghana Cedi—analysts warn that the relief could be temporary.

Ghana’s currency has been supported in recent months by strong gold exports, foreign exchange inflows, and tight monetary policy.

However, should the cedi weaken again, the new GH₵1 levy could push pump prices higher.

Wider economic consequences

Even if the current tax doesn’t immediately reflect at the pumps, its ripple effects across the economy are expected to be significant.

Transport unions—operating on razor-thin margins and wee—may preemptively raise fares, while logistics-heavy sectors like agriculture, construction, and retail could pass added costs down to consumers.

There are also psychological and economic implications to consider.

Business leaders warn that new taxes, particularly those affecting fuel, can shift inflationary expectations upward.

Once consumers and firms begin to anticipate continued tax hikes, this sentiment can destabilise prices, erode purchasing power, and stall the fragile macroeconomic recovery.

Calls for rethink of fuel pricing policy

With inflation already high and wage growth lagging behind, civil society groups and economists are calling for a comprehensive review of Ghana’s fuel pricing framework.

They argue that a more transparent and equitable system is needed—one that ensures cost recovery for energy services without overburdening the average Ghanaian.

Until then, every litre of fuel will serve as a reminder of the growing tension between fiscal consolidation and economic relief, in a country where every cedi increasingly counts.

Post Views: 188
Tags: Energy Sector Levy (Amendment) BillFuel
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