President John Dramani Mahama has defended the government's decision to introduce a new levy on petroleum products, describing it as “difficult but necessary” to stabilize the economy and ring-fence critical funding.

Parliament on Monday passed a new law that imposed a levy of GHS1 on every litre of fuel.

Speaking at the Jubilee House on Tuesday during the presentation of the final report of the National Economic Dialogue 2025, the President acknowledged that the move has stirred concerns among Ghanaians but insisted the levy is both justifiable and prudent.

“This was not a decision we took lightly,” he said. “Though difficult, it is necessary and justifiable.”

According to President Mahama, proceeds from the new petroleum levy will not be channeled into the Consolidated Fund, where public revenue is traditionally lodged. Instead, he explained, the funds will be insulated from what he described as the "hazards" of the consolidated fund—ensuring that they are used solely for their intended purposes, including strategic energy infrastructure and cushioning the economy against external shocks.

This approach ensures the funds are protected and effectively deployed to where they are most needed.

The President also promised firm action to address what he called systemic inefficiencies in the petroleum sector, hinting at tighter oversight, improved transparency, and better accountability to ensure value for money.

While the levy is expected to result in a marginal increase in fuel prices at the pumps, government officials say the long-term benefits, including economic stability and investment in energy resilience, far outweigh the immediate discomfort.

The new levy comes at a time when the government is under pressure to reduce fiscal deficits, plug revenue leakages, and find sustainable means of funding development without overreliance on external borrowing.

Despite public skepticism, President Mahama expressed optimism that Ghanaians will come to appreciate the broader intent behind the move.

Explainer
So why is another GH₵1 being added to fuel prices, and where did all the previous billions go?
Check out our explainer.