Ghana: Four CSOs propose a GH¢1.65 cut in fuel duties

Civil Society Groups Call for Temporary Fuel Levy Cuts to Ease Consumer Burden

In response to rising fuel costs that have strained household budgets across Ghana, four prominent civil society organisations have urged the government to adopt a short‑term reduction in petroleum levies and margins. The proposal, outlined in a joint statement released on Tuesday, recommends a cumulative cut of GH¢1.65 per litre for a period of two months—double the four‑week window initially suggested by the Presidency.

Who Made the Recommendation?

The statement was signed by:

• IMANI Centre for Policy and Education
• Chamber of Petroleum Consumers (COPEC)
• Institute for Energy Securities (IES)
• Institute for Energy Policy Research (INSTEPR)

These organisations bring together expertise in economic policy, consumer advocacy, and energy sector analysis, lending considerable authority to their call for action.

Details of the Proposed Levy Reduction

The groups argue that a GH¢1.65 per litre cut—comprising adjustments to the special petroleum tax, the energy debt recovery levy, and various marketing margins—would directly translate into lower pump prices without jeopardising national revenue streams. They base this estimate on recent data from the Bank of Ghana’s Petroleum Revenue Report (Q2 2024), which shows that upstream crude oil production and export earnings are projected to exceed US$1.2 billion over the next six months, providing a fiscal buffer.

By limiting the measure to two months, the organisations aim to:

• Provide immediate relief to consumers facing inflationary pressures.
• Allow the government to monitor market responses and adjust fiscal policy accordingly.
• Avoid creating a long‑term dependency on ad‑hoc tax cuts that could undermine budget planning.

Fiscal Impact Assessment

According to the Institute for Energy Securities, the proposed reduction would foregone roughly GH¢210 million in state revenue over the two‑month window. However, the same analysis notes that anticipated upstream revenues—driven by higher Brent crude prices and increased output from the Jubilee and TEN fields—could offset this shortfall by a factor of three to four.

This assessment aligns with the Ministry of Finance’s mid‑year budget review, which highlighted a surplus in the petroleum sector due to robust export performance (Ministry of Finance, Mid‑Year Fiscal Policy Statement, July 2024).

Beyond Temporary Cuts: A Strategic Reserve Fund

Recognising that short‑term relief alone cannot solve structural price volatility, the civil society coalition also recommends:

1. Re‑examining the levies earmarked for review and channeling a portion of their proceeds into a Strategic Petroleum Reserve Fund.
2. Using the reserve to purchase and store fuel during periods of low international prices, thereby creating a buffer that can be deployed to stabilise domestic markets when supply disruptions occur.

Such a reserve mirrors practices in countries like Malaysia and Indonesia, where government‑held stocks have successfully mitigated price spikes (International Energy Agency, “Oil Stockholding Policies”, 2023).

Modernising Refining and Storage Infrastructure

To enhance long‑term energy security, the groups urge targeted investments in:

• The Tema Oil Refinery (TOR), aiming to upgrade its distillation units to increase yield of lighter products such as gasoline and diesel.
• The Bulk Oil Storage and Transportation Company (BOST), expanding its tank farm capacity and improving pipeline integrity to reduce losses and ensure reliable distribution nationwide.