Renowned economist and Professor of Finance, Godfred Alufar Bokpin, has expressed cautious support for the newly introduced GH¢1 fuel levy, citing recent improvements in Ghana’s economic indicators as justification.
Speaking on Morning Starr with Naa Dedei Tettey, Prof. Bokpin acknowledged that while the decision is far from ideal, the current economic context makes it a necessary step.
According to him, the levy could help the government raise much-needed funds to procure fuel.
He added that it could also signal investors that the country is serious about fixing the financial challenges in the energy sector.
He said, “So in the last five weeks or so, we’ve seen aggressive strengthening of the currency. We’ve seen the pass-through of that benefit, in terms of fuel price. If you use the baseline from where the export price was before the aggressive strengthening, and you look at where we are now, practically, everybody’s saving like close to 3.2 cedis for every fuel you buy. I believe that that conserved advantage of space that has been created has enabled government to say that, okay, we could slot in this one cedi per litre, because they’re saving, if you are looking at probably 3.2 cedis.”
“So instead of passing on all of that to the consumer, we could take one cedi, and that will help us in the immediate, to be able to have the necessary resources to procure fuel and to also create a kind of repayment capacity as a signal to our investors and creditors that the energy sector is not collapsing. If I look at it from that perspective, I would say, and I’ve said that before, that it’s not the optimal decision to take, but under the circumstances, I will go for it. That, okay, let’s sacrifice, because we’ve seen reduction in here. And then so that, because I estimate that if we have to spend, let’s say, $500 million or even $1.1 billion over the next 11 months or so to procure fuel and all of that, we don’t have that fiscal fluid. If we want to go on that path, we are likely to derail the gains we are seeing right now, because it’s quite fragile and delicate. It would have been difficult for government to justify this levy if we haven’t seen a gradual reduction in the export price because of the favorable world oil price and also the aggressive strengthening of the currency.”
Prof. Bopkin explained that this is the best time to impose the levy citing improvements in the economy.
“I don’t think government would have gathered the courage to introduce this. But given that, it’s easier to accept this. It’s not the optimal thing to do, but in the circumstance, we can say that yes, we’ve seen the pass-through, we’ve seen the reduction, and in fact in the last four weeks or so, the savings in terms of the reduction in export price has been quite something to be proud of, and we wish it could continue.”
Parliament passed the Energy Sector Levy (Amendment) Bill, 2025, on Tuesday, June 3.
The bill imposes a GH¢1 tax on every litre of petroleum products—a move that has sparked criticism from the Minority in Parliament, transport unions, and other stakeholders.
Government officials argue the measure is crucial to stabilise the country’s struggling energy sector, which is currently burdened by a legacy debt of about $3.1 billion.
Presenting the bill, Finance Minister Dr. Cassiel Ato Forson assured Ghanaians that the new levy would not lead to an increase in pump prices, citing the recent appreciation of the cedi as a buffer.
He explained that the revenue would be dedicated to purchasing fuel for power generation, reducing load shedding, and improving grid stability.
Source: Ghana/Starrfm.com.gh/Hamdia Mohammed
