The African Institute of Energy Sustainability (AIES) expresses deep concern over the Government of Ghana’s decision to introduce a new Energy Levy of GH¢1.00 per litre of fuel, popularly referred to as the “Dumsor Levy.”

While the government claims this measure is intended to address persistent power outages and financial instability in the energy sector, such justification is economically flawed and socially inequitable.

It must be emphasized that over 77% of fuel imported into the country is consumed in the transportation sector, not the power sector. As such, imposing this levy on fuel usage unfairly shifts the burden of energy sector mismanagement onto an unrelated segment of consumers.

This approach is not only misplaced but also threatens to worsen the cost of living for millions of Ghanaians.

Currently, Ghanaian citizens already pay between 24% and 25% in taxes and levies per litre of fuel at the pump. With this new Energy Levy, the burden will increase to 32% and 33%, pushing pump prices higher and triggering a ripple effect of price increases across all sectors of the economy from food transportation and production to commerce and household expenses.

While we acknowledge the seriousness of Ghana’s Power debt, estimated at US$2.5 billion, we also know the key sources of this crisis:

• Take-or-pay power contracts that leave government liable for unused capacity
• High technical, distribution, and commercial losses
• Unrealistic tariffs that do not reflect cost recovery
• The impact of forex volatility on dollar-indexed contracts
• Weak public sector oversight and planning in power procurement and delivery

These are structural issues, and no amount of taxation on fuel can resolve them. Imposing new levies is simply treating symptoms, not curing the disease.

In numerous policy papers and public forums, AIESD has proposed viable and sustainable reforms.

We, therefore, reiterate the following recommendations to restore efficiency and financial health to the power sector:

1. Merge ECG and NEDCo into a single distribution utility and unbundle distribution from retail operations.
2. Giving the retail functions on concessionary basis: Concession retail services to private operators through transparent and performance-based contracts.
3. Empower or establish an Independent Power Administrator (IPA) within or outside GRIDCo to handle power planning, contracting, and forecasting, to avoid politically motivated agreements.
4. Accelerate boundary metering and complete energy accounting across the transmission and distribution value chain.
5. Upgrade national power infrastructure, with a clear financing and maintenance strategy tied to performance and loss reduction.

We call on the government to immediately withdraw the Energy Levy and instead pursue deep, evidence-based reforms that address the real drivers of the sector’s crisis.

It is neither just nor prudent to use fuel taxes to compensate for longstanding inefficiencies in electricity governance.

Ghana needs bold leadership and sustainable solutions and not another financial burden on its citizens.