Mahama Signs GH¢1 Fuel Levy Into Law

President John Dramani Mahama has officially signed the Energy Sector Levy (Amendment) Bill, 2025 into law, approving a new GH¢1 tax on every litre of petroleum products. The move, announced in Accra on Thursday, June 5, is already generating heated debate among Ghanaians.

The levy is expected to raise an additional GH¢5.7 billion annually, which the government says is urgently needed to tackle the country’s deepening energy sector debt, which stood at US$3.1 billion as of March 2025.

According to the government, the primary goal of the new levy is to help clear these debts and maintain a stable power supply, avoiding a return to the dreaded “dumsor” (power outages) that have affected businesses and households in the past.

Just a day before signing the bill, President Mahama addressed public concerns in a passionate defense of the measure.

“This decision, though difficult, is necessary and justifiable,” he stated during the presentation of the National Economic Dialogue Planning Committee’s final report.

He emphasized that all funds raised through the levy would be strictly ring-fenced—meaning they’ll be used only for specific purposes within the energy sector. These include:

• Paying down legacy debts
• Funding ongoing fuel purchases
• Ensuring steady supply to prevent power shortages

The energy sector’s financial troubles include huge debts owed to Independent Power Producers (IPPs), State-Owned Enterprises (SOEs), and fuel suppliers. Estimates show that clearing these debts completely would require at least US$3.7 billion, plus another US$1.2 billion to cover fuel needs for 2025 alone.

The bill’s path to becoming law was not without political drama. Parliament passed it on Tuesday, June 3, without the support of the Minority Caucus, who staged a walkout in protest. They argued the levy would place an unnecessary burden on Ghanaians already dealing with economic hardships.

However, supporters of the bill, led by MP Mahama Ayariga, insisted the levy is manageable—citing the strong performance of the Ghana Cedi, which they claim will help cushion consumers from immediate price hikes at the pump.

Now law, the GH¢1 fuel levy becomes a key pillar in the government’s strategy to pull Ghana’s energy sector out of crisis. Whether it will bring lasting stability or fuel more public frustration remains to be seen.