Parliament has passed a bill to amend the Energy Sector Levies Act, 2025, in a move aimed at strengthening revenue mobilisation and addressing widespread abuse within the country's fuel subsidy regime. The changes, which raise the Energy Sector Shortfall and Debt Repayment Levy on fuel oil from GH¢0.24 per litre to GH¢1.93 per litre, are intended to plug significant revenue leakages and curb tax evasion schemes.
Levy Hike Targets Fuel Oil Abuse
The Energy Sector Levies (Amendment) Bill, 2026, raises the Energy Sector Shortfall and Debt Repayment Levy on fuel oil from GH¢0.24 per litre to GH¢1.93 per litre, bringing it in line with the rate applied to diesel and marine gas oil. This move is aimed at plugging significant revenue leakages and curbing tax evasion schemes that have undermined the effectiveness of fuel subsidies designed to support industries.
Tax Exemptions Shift from Ex-ante to Ex-post
The amendment also extends the Road Fund Levy to fuel oil. According to Finance Minister Dr Cassiel Ato Forson, the changes are intended to give tax exemptions to industries, but only after they have paid the levies upfront at the point of importation. Companies using fuel oil for industrial purposes would then apply for refunds, as opposed to the previous system where they claimed tax exemptions before paying for the fuel.
Government Estimates Revenue Losses at US$25 Million
Ghana lost an estimated US$25 million during the first half of 2026 through abuses within the fuel subsidy regime, according to Dr Forson. The Finance Minister warned that the country stood to lose about GH¢1 billion annually if the loopholes were not closed. He emphasized that the amendment does not introduce a new tax on petroleum products but rather changes the mechanism through which tax exemptions are granted.
Minister Stresses No New Tax, Faster Refund System
Dr Forson stressed that the amendment does not introduce a new tax on petroleum products but rather changes the mechanism through which tax exemptions are granted. For emphasis, he added that there will not be a tax increase on petroleum products. The Finance Minister also announced that the government will amend the Revenue Administration Act to make the tax refund system relating to industries buying fuel oil move from 90 days to 14 days.
The government believes the amendment will help safeguard public revenue, improve the integrity of the downstream petroleum sector, and ensure that fuel subsidies benefit only legitimate industrial users. As the country continues to grapple with the challenges of fuel subsidy abuse, the passage of this bill is a significant step towards plugging revenue leakages and ensuring that the intended benefits of fuel subsidies reach their intended targets.
Source: Joy Online
