Exposed: 70% of fuel cost in Ghana just taxes

It has emerged that Ghanaians are not enjoying the drastic fall in fuel prices because taxes alone constitute about 70% of the cost of fuel in Ghana today.

For example, Energy Debt Recovery Levy of 41 pesewas per litre of petrol and diesel is said to be money that would go to buy fuel for the electricity sector.

Even though a barrel of crude oil on the world market as of yesterday was $38, as against $100 in June last year, consumers in Ghana now pay about GH¢15 per a gallon of fuel, an unreasonable price.

On the other hand, in the United States of America (USA), a gallon of petrol is sold at just about $2. The fuel price increase has imposed more hardship on the already suffering Ghanaian.

With the new increases, taxes on petrol per litre are Excise Duty, 2.78 pesewas per litre; Energy Debt Recovery Levy, 41 pesewas per litre; Road Fund Levy, 40 pesewas per litre; Energy Fund Levy, 1 pesewa per litre; Price Stabilisation and Recovery Levy, 12 pesewas per litre.

Other margins are Primary Distribution Margin, 4.5 pesewas per litre; BOST Margin, 3 pesewas per litre; and Fuel Marketing Margin, 1.5 pesewas per litre.

Each tax component and margins also attract 17.5% Value Added Tax (VAT), which the consumer also pays.

For diesel, the tax components per litre are Excise Duty, 1.8 pesewas per litre; Energy debt recovery levy, 41 pesewas per litre; Road Fund Levy, 40 pesewas per litre; Energy Fund Levy, 1 pesewa per litre; Price Stabilisation and Recovery Levy, 10 pesewas per litre.

Other margins are Primary Distribution Margin, 4.5 pesewas per litre; BOST Margin, 3 pesewas per litre; and Fuel Marketing Margin, 1.5 pesewas per litre.

Each tax component and margins also attract 17.5% Value Added Tax (VAT), which the consumer also pays.

All the above taxes exclude the actual price of the product, which also attracts 17.5% VAT.

Govt bagged GH¢3.2 billion from taxes in 4-and-half years

Government bagged GH¢3.2 billion from taxes imposed on petroleum products for the past four-and-half years.

This amount accrued between January 2011 and June 2015.

Now that subsidies have been scrapped, government will have to clearly state specific projects the monies from such taxes will be used for.

The question on the lips of many is how government has spent the GH¢3.2 billion that accrued in the past four-and-half years.

For instance, while the Tema Oil Refinery (TOR) Debt Recovery Levy generated over GH¢1.6 billion within the four-and-half years, the refinery remains closed due to huge indebtedness.

The TOR Debt Recovery Levy was introduced in a bid to clear the massive debt overhang on the refinery.

Currently, taxes on petroleum products constitute over 20% of the price of fuel.

Data examined by The Finder indicates that within the same period, an amount of GH¢880 million also accrued from the Road Fund to the state, yet roads in the country are in deplorable state.

Despite this, a bill has been presented to Parliament which proposes a number of taxes, including recovery margins, on fuel.

The breakdown of the GH¢3.2 billion revenue for the four-and-half years is 2011 -GH¢390,663,167.40; 2012 – GH¢468,627,829.51; 2013 – GH¢514,341,781.52; 2014 – GH¢775,984,110.74; and Jan-June 2015 – GH¢1,053,949,345.67.

For the four-and-half-year period, Road Fund accumulated GH¢880,478,324.35; Excise Duty generated GH¢338,096,690.34; Energy Fund accrued GH¢7,004,420.51; Exploration Levy amounted to GH¢14,688,001.25; Cross Subsidy bagged GH¢134,324,167.04; TOR Debt Recovery Levy generated GH¢1,165,635,051.25; and Special Petroleum Tax (SPT) amounted to GH¢931,983,887.18.

Excise Duty – 2011 to June 2015 (GH¢338,096,690.34)

The breakdown of Excise Duty for the four-and-half-year duration is 2011 – GH¢63,421,143.57; 2012 – GH¢74,654,260.81; 2013 – GH¢79,952,816.23; 2014 – GH¢79,697,549; and GH¢40,370,920.73 for the first six months of 2015.

Road Fund – 2011 to June 2015 (GH¢880,478,324.35)

For Road Fund, GH¢145,610,059.50 accrued for 2011; GH¢174,113,652.78 was generated in 2012; GH¢239,164.22 accumulated in 2013; GH¢244,683,812.14 accrued in 2014; and GH¢127,831,635.72 was generated in the first six months of 2015.

Energy Fund – 2011 to June 2015 (GH¢7,004,420.51)

During the four-and-half years, the Energy Fund generated GH¢1,271,683.96 for 2011; GH¢1,496,760.11 for 2012; GH¢1,608,011.40 for 2013; GH¢1,749,091.30 for 2014; and GH¢878,873.75 for the first six months of 2015.

Exploration Levy – 2011 to June 2015 (GH¢14,688,001.25)

Exploration Levy, added to the price of refined petroleum products to allow government generate some revenue to undertake oil exploration activities in Ghana, generated GH¢2,687,824.33 in 2011; GH¢3,169,409.89 in 2012; GH¢3,385,441.90 in 2013; GH¢3,637,235.65 in 2014; and GH¢1,808,089.42 for the first half of this year.

Aside the Exploration Levy Ghanaians have been mandated to pay, there is a whole budget every year that the government gives to GNPC to do exploration in the country, raising questions about the need for this levy, with some people calling for it to be scrapped.

Cross Subsidy – 2011 to June 2015 (GH¢134,324,167.04)

Revenues that accrued from Cross Subsidy are GH¢31,263,742.71 in 2011; GH¢34,688,233.33 in 2012; GH¢26,811,222.74 in 2013; GH¢29,077,423.84 in 2014; and GH¢12,483,544.42 in the first six months of 2015.

TOR Debt Recovery Levy – 2011 to June 2015 (GH¢1,165,635,051.25)

TOR Debt Recovery Levy, which was introduced in a bid to clear the massive debt overhang on the refinery as a result of under-recoveries, accrued GH¢208,936,198.75 in 2011; GH¢249,881,979.26 in 2012; GH¢267,965,557.51 in 2013; GH¢291,853,220.95 in 2014; and GH¢146,998,094.78 between January and June this year.

Special Petroleum Tax (SPT) – 2011 to June 2015 (GH¢931,983,887.18)

Special Petroleum Tax (SPT), which was imposed on selected petroleum products in 2014, generated GH¢183,438,611.54 in its first year and GH¢748,545,275.65 in the first half of 2015.