A Senior Research and Policy Analyst at the Institute for Energy Security (IES), Smith Prosper Boahene, has cautioned against calls to scrap the GH₵1 fuel levy, insisting that doing so now would be “premature” despite a recent drop in global oil prices.

Speaking on JoyNews on Wednesday, March 25, Boahene argued that although international market conditions are improving, the levy remains critical to addressing Ghana’s long-standing energy sector debt, a point he says must not be overlooked in the current public debate.

“IES from the commencement has been against it; that call is premature,” he stated, referring to proposals to remove the levy. “The levy is there to serve a very critical purpose… to replenish the debt that has been accumulating in the sector.”

His comments come at a time when global crude oil prices have dipped by about 5%, falling from around $104 per barrel to approximately $98.95, while gas prices in Europe have also declined by roughly 8%. Boahene linked these developments to easing geopolitical tensions, particularly renewed efforts to de-escalate conflict in the Middle East following pronouncements by former US President Donald Trump.

According to him, these global shifts have reduced the external pressures that initially drove fuel price hikes, raising questions about whether Ghana still faces the same level of risk from international factors.

“And so we need to ask, are we still under threat? Those fears are being decreased a little bit,” he explained, adding that the improved outlook should be factored into policy decisions.

However, Boahene stressed that the GH₵1 levy plays a crucial role in stabilising Ghana’s energy sector, which has been burdened by significant legacy debts over the years. He pointed to the government’s recent payment of a $500 million guarantee to the Bank of Ghana as evidence of efforts to revive the sector.

He also highlighted persistent operational challenges at the Electricity Company of Ghana (ECG), including commercial and distribution losses, which continue to worsen the sector’s financial position.

Removing the levy, he warned, could lead to under-recoveries that would eventually be passed on to consumers.

“In the short to medium term, you may say let’s take off the GH₵1 levy, but the citizens are going to pay for that,” he cautioned.

Boahene further questioned whether it is justified to scrap the levy at a time when global fuel prices are beginning to stabilise, and Ghana is only entering its first pricing window, with indications that fuel prices could still rise by about 13%.

Instead of removing the GH₵1 levy, the IES is proposing an alternative approach, the temporary suspension of the Price Stabilisation and Recovery Levy (PSRL), which forms part of the fuel price build-up. He noted that similar interventions were implemented in 2021 and 2024 to cushion consumers.

“What we’ve suggested is that the PSRL should rather be suspended… there have been precedents for that,” he said.