ASEC kicks against GH¢1 per litre fuel levy

The Africa Sustainable Energy Centre (ASEC) has voiced strong opposition to the government’s GH¢1 levy on every litre of fuel, describing the measure as “short-sighted” and disproportionately burdensome on citizens.

The levy, which is intended to raise funds to support the country’s beleaguered energy sector, has sparked concern that it will exacerbate the financial strain on households and businesses already grappling with a challenging economic climate.

ASEC cautions that the levy, approved by Parliament on Tuesday, June 3, 2025 could have far-reaching consequences on inflation, transport costs, commodity prices, and the general cost of living.

“Fuel is central to Ghana’s economy. From agriculture and logistics to food distribution, the price of fuel has a direct bearing on virtually every essential good and service,” it said in a statement signed by its Executive Director, Justice Ohene-Akoto.

Currently, more than 40 per cent of fuel pump prices in Ghana are attributable to taxes and levies, including the Energy Sector Recovery Levy of 20 pesewas per litre. The introduction of a new levy would only intensify this fiscal pressure, ASEC argued, without resolving the underlying inefficiencies in the energy system.

Structural issues, not revenue shortfalls

According to ASEC, the core challenges within the sector lie not in insufficient revenue, but in systemic inefficiencies, particularly within the operations of the Electricity Company of Ghana (ECG).

These issues include: outdated infrastructure; inconsistent revenue collection; illegal electricity connections/electricity theft and; technical and administrative losses.

“Before imposing additional taxes, we must ask: why are we not able to collect what is already owed?” the statement posed rhetorically.

The centre called on government to prioritise transparency, digital reforms, and operational efficiency, rather than shifting the financial burden of mismanagement onto the public.

Reallocate existing funds properly

ASEC also raised concerns about the use of existing energy-sector levies, notably the Energy Sector Recovery Levy. According to the statement, these funds are often diverted to unrelated infrastructure projects, undermining their intended purpose.

“The government must ensure proper appropriation and oversight of energy-related funds. Misapplication not only reduces their impact but also erodes public trust,” ASEC warned.

Inefficiency should not be incentivised

ASEC cited remarks made by the Minister of Finance, who previously noted: “We must not reward inefficiency with higher tariffs”.

The think-tank argues that this principle should extend to taxation. Without meaningful reform, introducing a new fuel levy would serve only to entrench inefficiency and defer the structural changes required for long-term sustainability.

Reforms

The energy sector is reportedly accruing liabilities of around US$70 million each month, a trend ASEC says is unsustainable without bold and immediate reform. It

To remedy the situation, the think-tank is advocating comprehensive operational reforms at ECG, investment in smart metering and digital infrastructure and enhanced regulatory oversight

In addition, it is calling for the elimination of technical and commercial losses, as well as accountability for funds already collected

“We may need to root out non-performing actors from the system, or all efforts by government will be undermined,” ASEC stated.

The statement concluded by urging the government to focus on sustainable, long-term reforms instead of short-term revenue-generating measures: “Let us fix the system, not just the symptoms”.