A Senior Research and Policy Analyst at the Institute for Energy Security (IES), Smith Prosper Boahene, has cautioned that calls to remove Ghana’s GH₵1 fuel levy are “premature,” even amid recent declines in global oil prices.
Speaking, Boahene said the levy remains essential for addressing the country’s long-standing energy sector debt, a factor often overlooked in public debates.
“IES has consistently maintained that scrapping the levy now is premature,” he stated. “The levy serves a critical purpose: replenishing the debt that has been accumulating in the sector.”
Boahene’s remarks come as global crude oil prices fell about 5%, from $104 per barrel to roughly $98.95, while European gas prices dropped nearly 8%. He linked the price declines to easing geopolitical tensions, including renewed efforts to de-escalate conflict in the Middle East following statements by former US President Donald Trump.
“These global shifts have eased the external pressures that initially drove fuel price hikes,” Boahene explained. “We need to ask: are we still under the same level of threat? Those fears are diminishing, and this should be factored into policy decisions.”
Despite the improving international outlook, Boahene stressed that the GH₵1 levy is vital for stabilising Ghana’s energy sector, which continues to grapple with legacy debts. He pointed to the government’s recent $500 million guarantee payment to the Bank of Ghana as part of efforts to revive the sector.
He also highlighted ongoing operational challenges at the Electricity Company of Ghana (ECG), including commercial and distribution losses, which continue to strain the sector’s finances.
“Removing the levy could lead to under-recoveries that will eventually be passed on to consumers,” he warned. “In the short to medium term, citizens will bear the cost if the levy is scrapped.”
Boahene further questioned whether it is justified to remove the levy at a time when global fuel prices are stabilising and Ghana is entering its first fuel pricing window, with indications that prices could still rise by about 13%.
Instead of eliminating the GH₵1 levy, the IES recommends a temporary suspension of the Price Stabilisation and Recovery Levy (PSRL), which is part of the fuel price build-up. He noted that similar interventions were implemented in 2021 and 2024 to cushion consumers.
“What we’ve suggested is that the PSRL should rather be suspended… there have been precedents for that,” he said.