Fuel Prices in Ghana: New Energy Levies Spark Debate on Inflation
Colaboradores
The recent implementation of the Energy Sector Levies (Amendment) Act, 2025 (Act 111) in Ghana is generating significant discussion, particularly regarding its potential impact on fuel prices and the broader economy. Professional services firm, PwC, has weighed in on the matter, highlighting both the benefits and potential drawbacks of the new levies.
Energy Sector Levies: A Double-Edged Sword?
According to PwC, the Energy Sector Levies are designed to bolster the government's ability to stabilize the power supply and address the energy sector debt. Parliament's approval of an additional GH¢1 per litre on selected petroleum products is expected to significantly increase revenue, with the revised ESLA budget jumping from GH¢6.7 billion to GH¢9.6 billion. The Energy Sector Shortfall and Debt Repayment Levy (ESSDRL) component alone is projected to rise from GH¢5.7 billion to GH¢8.6 billion.
However, this increased revenue comes at a cost to consumers. PwC warns that higher fuel prices, resulting from the levies, could put upward pressure on transport costs and overall inflation. This is a major concern, as it could negatively impact vulnerable households and the general cost of living.
Monitoring Inflation and Exploring Alternatives
PwC's commentary on the 2025 Mid-Year Budget Review emphasizes the need for careful monitoring of inflationary impacts, especially on transport and vulnerable populations. As of mid-year, provisional collections from the ESSDRL and related levies stood at approximately GH¢2.9 billion, indicating a strong start towards the revised revenue target. However, the full impact of the GH¢1 per litre tax, introduced in the second half of the year, remains to be seen.
To mitigate the potential adverse effects of the ESSDRL, PwC recommends that the government explore alternative funding mechanisms to reduce over-reliance on petroleum-based levies in the long term. This could involve diversifying revenue sources and implementing more sustainable energy policies.
- Closely monitor inflationary impacts, particularly on transport and vulnerable households.
- Explore alternative funding mechanisms to reduce over-reliance on petroleum-based levies in the long term.
The implementation of the Energy Sector Levies presents both opportunities and challenges for Ghana. While the levies have the potential to improve the power supply and reduce debt, it is crucial to carefully manage their impact on fuel prices, inflation, and the overall economy.