A sharp divide has emerged over the future of Ghana’s energy sector financing, as energy experts and grassroots activists clash over the necessity of fuel-related levies amidst a biting cost-of-living crisis.
At the center of the storm is a proposed one-cedi levy on petroleum products, which the Africa Centre for Energy Policy (ACEP) describes as a “bitter pill” necessary to prevent the total collapse of the national power grid.
“The Sector is Gasping” – ACEP
Speaking on the dire state of the energy industry, the Executive Director of ACEP, Ben Boakye, argued that the one-cedi levy is essential to address the systemic debt choking the sector. According to Boakye, the revenue generated from this levy is the only immediate lifeline available to keep the power sector afloat.
“The reality is that the power sector is gasping for breath under the weight of legacy debts and operational inefficiencies,” Boakye stated. He explained that without a dedicated funding stream to settle arrears owed to Independent Power Producers (IPPs) and fuel suppliers, the country risks a return to protracted load shedding (Dumsor).
Boakye emphasized that while the timing is difficult for consumers, the alternative
a complete breakdown of the power system would be far more expensive for the Ghanaian economy.
The People’s Forum Hits Back
However, this technical justification has found little sympathy with the “People’s Forum,” a pressure group that has officially petitioned the government to scrap all fuel-related levies.
The group, representing a cross-section of frustrated drivers, traders, and ordinary citizens, argues that the cumulative burden of taxes on petroleum products has become “extortionate.” In their petition, they highlighted that fuel prices serve as a catalyst for inflation, driving up the cost of food and transport to unbearable levels.
“We cannot be the ones to always pay for the mismanagement of the energy sector,” a spokesperson for the People’s Forum noted during a press briefing. “The government must find other ways to plug the holes in the budget rather than squeezing the last cedi out of the pockets of struggling Ghanaians.”
A Policy Dilemma
The government now finds itself in a precarious position. On one side, technical experts like ACEP warn that the energy sector faces a $1.5 billion shortfall that could trigger a national blackout. On the other, the People’s Forum represents a growing public sentiment that the populace has reached a “breaking point” regarding taxation.
The fuel-related levies currently include the Energy Sector Levy (ESLA), the Sanitation and Pollution Levy, and the Special Petroleum Tax, among others. The addition of a new one-cedi levy, or the maintenance of existing ones, remains a political lightning rod.
As the Ministry of Finance reviews the petitions from the People’s Forum, the energy industry watches closely. For Ben Boakye and ACEP, the choice is between “a small levy or total darkness.” For the People’s Forum, it is a choice between “economic survival or state-induced poverty.”
Parliament is expected to deliberate on the energy sector’s financial requirements in the coming weeks, a session that is likely to be met with further protests at the gates of the house.
