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 struggling energy sector, has sparked concern that it will exacerbate the financial strain on households and businesses already grappling with a challenging economic climate.

ASEC cautioned that the levy, approved by Parliament on Tuesday, June 3, 2025, could have far-reaching consequences on inflation, transportation 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,” the Centre said in a statement signed by its Executive Director, Justice Ohene-Akoto.

Currently, more than 40 percent 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, ASEC argued, would only intensify this fiscal pressure—without resolving the underlying inefficiencies in the energy system. Structural Issues, Not Revenue Shortfalls

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

These issues include:

• Outdated infrastructure

• Inconsistent revenue collection

• Illegal electricity connections and theft

• Technical and administrative losses

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

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

ASEC also raised concerns about the use of existing energy-sector levies—particularly the Energy Sector Recovery Levy. According to the Centre, these funds are often diverted to unrelated infrastructure projects, thereby 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.

The Centre cited past remarks by the Minister of Finance, who previously noted:

“We must not reward inefficiency with higher tariffs.”

ASEC argued that this principle should also apply to taxation. Without meaningful reform, introducing a new fuel levy would entrench inefficiency and defer the structural changes required for long-term sustainability.