The Minister for Energy and Green Transition, Mr John Jinapor, has defended Parliament’s approval of a new GH¢1 levy on every litre of fuel purchased.
He argued that without the levy, the Ministry of Finance would be compelled to allocate GH¢10 billion from the national budget to fund power generation — a move that would significantly undermine statutory obligations, including allocations to the Ghana Education Trust Fund (GETFund).
Speaking on Joy FM on Wednesday, June 4, 2025, Mr Jinapor warned that diverting such a substantial amount of resources would cripple essential public services relied upon by ordinary Ghanaians.
He described the controversial fuel levy as the “lesser of two evils” in safeguarding the country’s fiscal stability.
“We’ve modelled that without this levy, the Finance Minister would need to allocate GH¢10 billion, which would affect statutory payments like GETFund,” Mr Jinapor said while defending the measure, which has sparked fierce political opposition.
His remarks came a day after Parliament passed the Energy Sector Levy (Amendment) Bill, 2025, under a certificate of urgency on Tuesday.
The Minority staged a walkout during the approval process, describing the levy as an unjustified burden on Ghanaians.
Finance Minister Dr Cassiel Ato Forson had earlier cautioned Parliament that the energy sector posed “the greatest economic and fiscal threat to the country,” revealing that total indebtedness stood at US$3.1 billion as of March 2025.
Mr Jinapor highlighted a structural flaw in Ghana’s electricity pricing model. He noted that liquid fuels — costing over US$1 billion annually — are not covered under the current electricity tariff regime.
“Even if ECG collected 100 per cent of tariffs, none of it would go towards procuring liquid fuels,” he stated.
He further disclosed that peak electricity demand has reached 4,300 megawatts, forcing the country to rely heavily on costly liquid fuels, as major gas infrastructure projects remain between 18 months and two years away from completion.
Justifying the timing of the levy, Mr Jinapor said fuel prices have dropped from GH¢16 per litre when the current government assumed office to approximately GH¢13, making room for the new charge.
“Even with the GH¢1 levy, the net effect is a GH¢3 reduction per litre compared to when we took office,” he explained.
The minister also criticised the energy policies of previous administrations. He pointed out that several power plants — including Aksell, Sunon Asogli, and KTPP — currently operate on liquid fuel, contrary to projections in the Energy Commission’s 2025 outlook, which anticipated a shift to gas.
He revealed that government payments to Independent Power Producers (IPPs) have increased by 70 per cent to stabilise power supply, and that efforts are ongoing to restructure the sector’s US$3.1 billion debt through negotiations.
The newly introduced levy is expected to raise GH¢5.7 billion annually, covering approximately 60 per cent of the country’s liquid fuel costs for electricity generation.
Mr Jinapor added that the government aims to scale up gas supply partnerships with companies such as Jubilee and ENI by the end of the year.
He also criticised the Electricity Company of Ghana (ECG) for inefficient spending, citing examples such as the procurement of cables without matching transformers. He pledged to enforce value-for-money principles across all energy sector procurement processes.
Dr Forson had earlier assured Parliament that the impact of the levy would be mitigated by gains from the Ghana cedi’s recent strong performance, suggesting that consumers would not see an immediate rise in pump prices.
