The fiscal justification for the GH¢1 per liter levy on petrol and diesel, introduced in the heat of the 2025 mid-year window, has evaporated. While the Minister of Finance argued in June 2025 that a drastic decline in global prices meant consumers could “assist” the government by paying an extra levy, the reality of March 2026 tells a completely different story. As at the 2nd pricing window of March, 2026, diesel price has GH¢15.60 per liter and petrol has exceeded to GH¢12.40 per liter implying that the very foundation upon which this levy was built has crumbled. For the sake of petroleum consumers and the broader Ghanaian economy, the Energy Sector Levy Act 1141 of 2025 must be amended under certificate of urgency to reduce or scrap some of the tax elements in the energy sector shortfall and debt repayment levy. Keeping the GH¢1 per liter in the energy sector shortfall of Act 1141 creates an issue of mistrust and lack of honesty as well as leadership by the ministry of finance.
The Original Argument No Longer Holds
To understand why this levy must go, we must revisit the rationale for its implementation. In June 2025, prices at the pump had indeed seen a decline. According to data from the Chamber of Oil Marketing Companies, prices had dropped for the seventh consecutive time that year, aided significantly by the Cedi appreciating by 34% against the dollar. Petrol had fallen to about GH¢12.38 per liter by June 2025 from GH¢14.99 per liter in January 2025, and diesel to GH¢12.88 per liter by June, 2025 from GH¢15.60 per liter in January, 2025. It was this “drastic decline” specifically a drop of GH¢2.61 for petrol and GH¢2.72 for diesel that the Minister used as a political shield to introduce the new tax.
His argument was simple, the consumer was paying less at the pump, the government could step in and take that margin to defray the energy sector debt. The Energy Sector Levies (Amendment) Act, 2025 (Act 1141) officially added approximately GH¢1 to the price build-up, bringing the total Energy Sector Shortfall and Debt Repayment Levy to GH¢1.95 for petrol and GH¢1.93 for diesel. The government effectively treated the global market disinflation as an opportunity to fill its own coffers, rather than a chance to provide lasting relief to households and businesses.
The Crushing Burden of March 2026
Fast forward to March 2026, and the market dynamics have violently reversed. The National Petroleum Authority (NPA) has announced significant hikes in price floors effective March 16, with diesel jumping to a floor of GH¢14.35 per liter and petrol to GH¢11.57 per liter. However, these are merely the minimum prices before overheads or markups are applied. The market as at Monday, 16th March 2025 saw the retail prices of diesel averagely sold above GH¢15.60 per liter and petrol sold averagely above GH¢12.60 per liter reverting to the peak prices seen in early 2025.
These increases are being driven by forces entirely outside the government’s control, same as observed in 2022 during the initial stages of Russia-Ukraine war. As of March 2026, escalating geopolitical tensions in the Middle East specifically the ongoing conflict involving America, Israel and Iran as well as strikes near the Strait of Hormuz have spiked global crude oil prices . This external shock makes the domestic levy untenable. In June 2025, the tax was absorbable because the Cedi had gained strength and world prices were low. Today, with global prices high and the exchange rate under renewed pressure, the GH¢1 levy is no longer a “small addition” it is the straw breaking the camel’s back.
The Mandate of the Levy Has Been Fulfilled
Perhaps the most compelling argument for the removal of the tax lies in the very success of the revenue mobilization it funded. The levy was sold to a skeptical public as a necessary tool to clear the energy sector’s legacy debt. By the government’s own admission, that mission has been accomplished.
According to the Ministry of Finance, between January and December 2025, the government paid approximately US$1.47 billion to reset the energy sector. This includes the full repayment of US$597 million drawn on the World Bank Partial Risk Guarantee, the settlement of all outstanding gas invoices to ENI and Vitol (approx. US$480 million), and the payment of roughly US$393 million in legacy debts to Independent Power Producers (IPPs). The World Bank guarantee has been fully restored, and the government has stated unequivocally that the “era of unchecked energy sector debt accumulation is over”. On pages 7 and 8 of the 2026 budget speech, the minister indicated that revenue collection has increased by about 90% and for that matter the sector was not accruing current debt.
The announcement by the finance minister on the defrayment of the sector debt nullifies any justification for the keeping Ghc1 per liter on the price build-up of petroleum products. Therefore, continuous collecting of the levy now transforms it from a “debt recovery” tool into a hidden general revenue tax. The consumer is being asked to pay for a problem that has allegedly been solved.
The Inflationary and Social Impact
Continuing this levy in the face of rising global prices is an economic own goal. CEMSE, in its commentary on the 2025 budget, warned that this levy would place “added pressure on consumers” through higher fuel prices, which would inevitably affect “transport costs and inflation”. With diesel price now exceeding GH¢15.60 per liter, highly inflationary figures are likely to rebound if the GH¢1 per liter per introduced on the price build up is not removed.
Diesel is the lifeblood of the Ghanaian economy because it powers the vehicles and cargos that carry food to the markets, the generators that back up our erratic power supply, and the machinery in the construction and mining sectors. A diesel price above GH¢15.60 will trigger an immediate spike in transportation fares and food prices. Simultaneously, petrol at GH¢13.00 will eat into the disposable incomes of commuters and private vehicle owners. To maintain a tax designed for a “debt crisis” during a “cost-of-living crisis” is to place fiscal policy at odds with the welfare of the citizenry.
Conclusion
The GH¢1 per liter levy was a product of its time introduced when prices were low to solve a debt problem. Today, prices are high and the debt is, by official record, cleared. The government has a choice to retain this tax and watch inflation spiral, or show empathy and economic prudence by withdrawing it. The consumers have paid their share and for that matter it is time for the government to fulfill its side of the bargain and remove this burdensome levy.
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