All Things Being Equal, GH¢1 Levy Could Take Ghana 7 Years to Clear Energy Sector Debt – CERPA Predicts

Ghana‘s newly introduced GH¢1 per litre energy sector levy may take up to seven years to fully address the energy sector legacy debt, this is according to a detailed policy brief by the Centre for Economic Research and Policy Analysis (CERPA).

However, this projection will only be achieved if everything works in favour of the government.

In the brief, copied to The High Street Journal, the think tank projects that by the end of December 2026, the levy will raise approximately GH¢9.0 billion, assuming stable fuel consumption, favorable exchange rates, and efficient implementation.

However, that amount, compared to the current total energy sector debt of US$3.1 billion, which is about GH¢38 billion based on the exchange rate as of June 10, 2025, is woefully inadequate to clear the debt.

Using the government’s own projection, the levy is estimated to rake in an annual revenue rate of GH¢5.7 billion. CERPA’s analysis reveals that it would take the government approximately seven years to retire the entire debt, and that is only if every assumption holds true.

“While generating GH¢5.7 billion annually through the levy represents a commendable step toward addressing the energy sector’s financial challenges, it would take the government approximately seven years to clear the outstanding debt, assuming stable conditions,” CERPA indicates.

CERPA’s analysis injects a strong dose of caution. The policy brief highlights several critical risk factors that could undermine the expected revenue from the levy.

This includes volatility in fuel consumption. The policy think tank says the levy is tied to fuel purchases, meaning any dip in demand, due to price hikes, economic slowdowns, or alternative energy adoption, could reduce collections.

Moreover, exchange rate uncertainty comes at a major risk to these projections. With Ghana’s currency prone to fluctuations, a depreciating cedi could balloon the dollar-denominated debt faster than revenue can keep pace, widening the financing gap.

The think tank further believes that the long-standing issues, such as poor governance, corruption, waste, and weak oversight in the energy sector, could siphon off much-needed revenue, limiting the levy’s actual impact on debt reduction.

Ghana’s energy sector has been struggling under the weight of unpaid capacity charges, excess generation, and mounting debts to Independent Power Producers (IPPs).

The government has touted the levy as a decisive move to stabilize the sector and rebuild credibility. The levy has also gotten the support of the International Monetary Fund (IMF), which believes it is a welcoming way to tackle the country’s energy sector challenges.

The government is banking on the GH¢1 levy to chart a path toward energy, but CERPA maintains without a robust, transparent framework to monitor collections, plug leakages, and manage debt repayment, the levy could become yet another tax with little real impact.

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