Power Or Pain? Ghana’s New Energy Levy Sparks National Debate

A fresh wave of public concern has erupted across Ghana following the government’s announcement of a proposed 1 cedi levy on every litre of petroleum product sold. Introduced through the Energy Sector Levies (Amendment) Bill, the measure aims to support the struggling energy sector but has drawn significant backlash over its potential economic burden.

Government’s Justification: A Bold Fix for a Broken Sector

According to the Ministry of Finance, the levy is designed to stabilise power supply, clear legacy debts owed to Independent Power Producers (IPPs), and fund urgent infrastructure upgrades. The Finance Minister maintains that the levy is vital to restoring investor confidence and ensuring consistent electricity for homes and businesses.

"A stable energy sector is essential for industrial expansion, job creation, and national development," the Minister stated.

What the 1 Cedi Levy is Expected to Do

1. Bail Out Utility Providers

The new tax is expected to provide liquidity to ECG, GRIDCo, and other power providers, helping them clear arrears and maintain power infrastructure.

2. Support Energy Infrastructure and Clean Power

Government sources indicate that part of the funds will go into renewable energy projects and grid modernization to reduce long-term dependency on fossil fuels.

3. Improve Business Competitiveness

Reliable electricity will lower the cost of doing business by reducing the need for backup generators, especially for SMEs.

Public Reaction: The Cost of Power

Despite the intended benefits, the levy has raised widespread concern:

Fuel Prices Will Rise

An additional 1 cedi per litre at the pump could trigger another round of increases in fuel prices. Transport fares, agricultural costs, and food prices are expected to rise in tandem, worsening inflation.

Low-Income Families at Risk

Experts warn that the tax will disproportionately affect the poor, who spend a larger share of their income on fuel, transport, and food.

Skepticism Over Past Levies

Citizens remain skeptical given the track record of previous levies introduced under the 2015 Energy Sector Levies Act (Act 899), such as the Energy Debt Recovery Levy and Price Stabilisation Levy, which many argue lacked transparency and failed to yield visible impact.

FAQs: All You Need to Know About the 1 Cedi Fuel Levy

Q1: What is the purpose of the 1 cedi levy?

The levy is meant to raise funds to pay energy sector debts, support infrastructure development, and ensure stable electricity supply.

Q2: Who will be most affected by the levy?

All petroleum consumers will pay, but low-income individuals and public transport users are expected to feel the greatest impact due to increased transport and goods prices.

Q3: How will the money be used?

According to the government, proceeds will go to utility companies and energy sector reform projects, including renewable energy.

Q4: Will this be a permanent tax?

That is currently unclear. Analysts are calling for a sunset clause—a time-bound limit—to avoid permanent burden without results.

Q5: What can the government do to ease the burden?
Policy recommendations include:

• Phasing out outdated levies to avoid duplication

• Ring-fencing the funds in a transparent, audited account

• Offering subsidies for public transport and low-income households

• Setting clear benchmarks to evaluate impact

A Test of Political Will and Public Trust

The Energy Sector Levy Amendment Bill, while intended to solve systemic challenges in Ghana’s energy sector, also poses a serious test of government accountability and public trust. For the levy to succeed, transparency, impact monitoring, and public engagement will be crucial.

If mismanaged, the policy risks deepening public dissatisfaction and economic pressure. But if implemented wisely, it could help light Ghana’s path toward a stable and sustainable energy future.