In a move aimed at stabilising Ghana’s increasingly fragile power sector, Parliament has passed the Energy Sector Levies (Amendment) Bill, 2025, to revise upward the Energy Sector Shortfall and Debt Repayment Levy, imposing a cedi on petroleum products.
The bill, laid before the House by the Minister for Finance, Dr. Cassiel Ato Forson, is expected to raise significant additional revenue to address Ghana’s mounting energy sector indebtedness and ensure sustainable power delivery across the country.
According to the memorandum accompanying the bill, the amendment is necessitated by the persistent financial risks posed by the country’s power sector.
“The total energy sector debt as at the end of March 2025 stands at three point one billion United States Dollars. The debt includes money owed to independent power producers, state-owned enterprises and fuel suppliers.”
Dr Cassiel Ato Forson, Ghana’s Minister of Finance
These obligations, the Finance Minister argued, have created a cascade of challenges, including energy shortfalls, inefficiencies, and frequent supply disruptions.
He stressed that the amendment is not merely a fiscal manoeuvre but a strategic response to avert a looming energy crisis.
It is envisaged that the new levy increment will provide a stable source of funding to support the procurement of liquid fuel for thermal power plants, which have become an indispensable component of Ghana’s energy mix.
According to the Minister, the growing reliance on thermal power to supplement hydroelectricity has exposed the country to additional costs that current electricity tariffs do not cover.
“According to the Public Utilities Regulatory Commission, the inclusion of the cost of liquid fuel in the price build will lead to an increase in electricity tariffs by over fifty per cent”.
Dr Cassiel Ato Forson, Ghana’s Minister of Finance
This, he argued, would adversely affect both industrial competitiveness and household income, and as such, the alternative route of increasing the sector levy was deemed a more sustainable and less burdensome solution for consumers.
Restoring Gurantees
In presenting the bill, Dr. Ato Forson emphasized the urgent need for the government to secure funding to restore guarantees that had previously been provided by international partners.
Due to Ghana’s inability to meet payment obligations to energy giants like ENI and Karpower, Dr Forson noted that a total of $632 million in guarantees—$512 million from the World Bank’s International Development Association (IDA) and $120 million from the Ghana National Petroleum Corporation (GNPC)—has been fully drawn down.
According to him, the government now faces the daunting task of replenishing these critical financial assurances while also sourcing a minimum of $3.7 billion to clear broader sector debt.
“The power sector risks imminent collapse if these unsustainable shortfalls are not resolved, particularly given that the fiscal cannot accommodate the financial needs of the sector.”
Dr Cassiel Ato Forson, Ghana’s Minister of Finance
A core feature of the amendment is the direct allocation of proceeds from the revised levy to the Energy Sector Support Account. These funds will be ring-fenced to ensure they are used specifically for procuring fuel for power generation, plugging financial shortfalls, and guaranteeing a consistent electricity supply.
The Finance Minister also assured the public that the increase in the levy will not affect fuel pump prices during the next pricing window, citing strong gains in the cedi’s performance to offset potential cost impacts.
He emphasised that the decision to increase the levy on petroleum prices is based on the need to find a balance between ensuring a stable power supply while promoting the financial sustainability of the sector.
Opposition and Criticisms
Nonetheless, the bill did not receive unanimous support in Parliament. The Minority Caucus, led by its leaders and the Member of Parliament for Effutu, Hon. Alexander Kwamena Afenyo Markin, staged a dramatic walkout during the final approval process, expressing strong opposition to the proposed levy increase.
The Minority’s protest was rooted in concerns about the cumulative burden of levies on citizens. Critics argue that the new levy will merely provide short-term relief without tackling the root causes of the energy sector’s inefficiencies, such as mismanagement, political interference, and a lack of structural reforms.
They question why consumers should continue to bear the brunt of failed energy policies, pointing out that past levies have done little to eliminate power sector debt or improve reliability in supply.
Despite the opposition, the government insisted that this latest intervention is a necessary trade-off to avoid a collapse of the power sector, which would have far-reaching consequences for economic stability and growth.
By earmarking the funds for targeted use, the government hopes to restore investor confidence in the energy sector while creating a pathway toward more resilient and financially sustainable operations.
Ghana’s energy sector is still a ticking time bomb, owing to years of sector mismanagement, procurement losses and power transmission inefficiencies.
Some Industry players caution that Ghana might end up starting over and having its citizens foot the bill for systemic shortcomings once more if the new funds are not handled openly and reforms are not vigorously pursued.
The stakes for fixing the problems facing Ghana’s energy sector are extremely high as the country enters the second half of 2025.
While the opposition and some well-meaning Ghanaians view the Energy Sector Levies (Amendment) Bill as just another burden with questionable benefits, the government views it as a strategic and essential tool. It remains to be seen if this most recent policy shift will result in long-term gains or just patch the cracks.
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