In a recently published research paper titled “Downstream Petroleum Products Taxation: A Call to Action,” the Africa Centre for Energy Policy (ACEP) issued a stark warning about the state of Ghana’s downstream petroleum sector.
The report painted a grim picture of inefficiencies, crony capitalism, and political patronage that have resulted in significant financial losses for the country. ACEP’s findings emphasized the urgent need for comprehensive reforms to salvage the sector and redirect its potential towards national development.
According to ACEP, the downstream petroleum sector in Ghana exemplifies the adverse consequences of unchecked corruption and mismanagement.
“While other nations have successfully leveraged petroleum taxation to fund critical development projects, Ghana has allowed the sector to become a drain on public resources, with billions lost to inefficiencies and corruption.”
Africa Centre for Energy Policy (ACEP)
ACEP’s report labels the current system as “unsustainable,” highlighting the need for immediate and strategic reforms.
The organization noted that billions of cedis collected through various petroleum-related levies and margins are poorly managed, resulting in minimal impact on critical infrastructure and social programs.
“The failure of the downstream petroleum sector in Ghana is a cautionary tale of what happens when crony capitalism and political patronage are allowed to flourish unchecked.”
Africa Centre for Energy Policy (ACEP)
Despite the Energy Sector Levies Act (ESLA) collecting GHS 9.7 billion annually to service energy and road sector debts, the energy sector’s financial woes have worsened over nine years, with no pragmatic solutions in sight.
ACEP highlighted that between 2019 and 2024, regulatory margins such as BOST margin, Primary Distribution Margin (PDM), Fuel Marking Margin (FMM) and the Unified Petroleum Price Fund (UPPF) increased by 300%, 247%, 350% and 429%, respectively.
Once tasked with strategic stockpiling, BOST now controls about 20% of the petroleum import market through the Gold for Oil Program, deviating from its core mandate.
This commercial shift questions BOST’s continuous receipt of regulatory margins to compete with the private sector that builds and maintains its own infrastructure.
ACEP’s Recommendations for Reform
ACEP offered a set of actionable recommendations to reform the downstream petroleum sector and maximize its contribution to Ghana’s development.
ACEP proposed converting the Unified Petroleum Price Fund (UPPF), Bulk Oil Storage and Transportation (BOST) Margin, Fuel Marking Margin, and Cross-Subsidy Margin (CRM) into direct tax revenues.
“By eliminating these burdensome margins and converting them into direct tax revenues, the government would be mitigating opportunities for corruption in the downstream petroleum sector.”
Africa Centre for Energy Policy (ACEP)
ACEP asserted that this reform could generate “about GHS 6.3 billion annually,” which could then be redirected to fund critical infrastructure projects such as the Free Senior High School (Free SHS) program and the development of highways.
To enhance transparency and accountability, ACEP suggested commercializing the Bulk Oil Storage and Transportation Company (BOST) and listing it on the stock exchange.
This would reduce inefficiencies and improve operational efficiency while alleviating the financial burden on consumers.
The report advocates for ending the outdated and corruption-prone premix fuel subsidy program. Instead, direct financial support should be provided to fisherfolk, enabling them to purchase fuel independently.
ACEP also suggested, “using solar-powered fishing boats to eliminate the need for premixed fuel altogether.”
“The government should prioritize addressing the energy sector debts in the short to medium terms to free up revenues for development purposes.
“As much as GHS 9.7 billion worth of levies are earmarked largely for energy sector and road sector debt servicing.”
Africa Centre for Energy Policy (ACEP)
The report also calls for the National Petroleum Authority (NPA) to build its regulatory capacity to encourage healthy competition in the downstream petroleum sector.
This would involve reducing the NPA’s direct intervention in product pricing and procurement processes, which should be left to market dynamics in a deregulated environment.
ACEP highlighted the need for the NPA to improve its capacity to monitor the quality and quantity of fuel delivered into the country and sold at the pump.
“This will eliminate the need for revenue assurance contracts and cumbersome fuel tracking systems by the NPA,” ACEP added.
ACEP emphasized that these reforms require strong political will and a commitment to prioritizing the interests of the Ghanaian people over entrenched political and economic interests.
“Only by taking decisive action can Ghana unlock the full potential of its downstream petroleum sector and ensure that it serves the public good,” the report concludes.
The call to action from ACEP is a timely reminder of the immense potential of Ghana’s downstream petroleum sector.
With strategic reforms, the sector could become a cornerstone of the country’s economic transformation, funding critical infrastructure and social programs while reducing corruption and inefficiency.
However, achieving these goals will depend on the government’s ability to implement ACEP’s recommendations and foster a transparent, accountable, and sustainable petroleum sector.
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