How Gov’t Can Reintroduce Strategic Stocks Levy to Build Fuel Reserves Without Hitting Consumers’ Pockets – Dr. Donkor’s Insights

The escalating geopolitical tensions in the Middle East and their accompanied threat to the global economy, of which Ghana is not an exception, have made it imperative for the country to urgently establish strategic stocks of fuel to shield the economy.

This is a forceful call from the former Minister for Power and ex-legislator, Dr. Kwabena Donkor. The energy expert is concerned that amid the now volatile global economy occasioned by the Israeli-Iranian Crisis in the Middle East, the country holds no strategic fuel reserves. He says the country only has operational stocks that keep that day-to-day supply running.

In an exclusive interview with The High Street Journal, Dr. Kwabena Donkor maintained that as the global geopolitical tensions intensify and energy markets remain volatile, the government must immediately reintroduce a Strategic Stock Levy to insulate Ghana from looming fuel supply disruptions.

“The expectation is that in the next window, from the 1st of July, the creeping prices will feed into the price build-up, and the price may go up slightly. But my biggest worry is that we really don’t have any strategic stocks. That is my worry,” he expressed concern.

Strategic Stocks: What is it?

Dr. Kwabena Donkor explained that strategic stocks are government-held fuel reserves set aside to stabilize national supply in times of external shocks. In previous regimes, he reveals that the stock was mainly funded by the Strategic Stock Levy to enable the government to keep this national fuel buffer.

However, he noted that the Strategic Stock Levy has been zero-rated for years, meaning there’s been no financial support to maintain such critical reserves.

In making an economic case for such a buffer, Dr. Donkor warned that Ghana’s dependence on global fuel markets without any back-up supply could create severe shocks to the economy should disruptions in logistics or pricing occur.

In his view, the state should aim for at least a 12-week reserve stock, with a revolving replenishment model every three months. Products stored beyond that risk losing quality due to degradation. This model, he emphasized, is used in many well-managed fuel economies globally and ensures constant availability without oversupply or waste.

Funding Without Burden—Leveraging Existing Margins for Strategic Security

The energy expert noted that he is wholly in support of the reintroduction of the strategic stocks levy. He, however, emphasized that the reintroduction should not come at the expense of consumers or result in an increase in ex-pump prices.

He believes there are numerous innovative means the government can reintroduce the levy without adding to the price build-up of fuel.

Anticipating public concerns about adding more levies, Dr. Donkor proposed a compelling financing framework that avoids increasing ex-pump prices for consumers.

He identified several efficiencies and existing petroleum margins from which funds could be redirected:

Primary Distribution Margin: “We can reduce this by 2 or 3 pesewas and divert that to strategic stocks,” he proposed.

Uniform Petroleum Pricing Fund (UPPF): Given that global oil prices have fallen, the transport-related savings within the UPPF can be partially reallocated.

Premix Subsidy Realignment: The current subsidy on premix fuel, over GHS 4 per litre, can be slightly reduced to contribute to the strategic stock fund.

Marine Gas Oil Levy: He says the absence of a levy on the MGO has led to a boom increasing criminal activities. He calls for the introduction of a levy on the MGO, which can fund strategic stocks.

“We can easily raise a minimum of five pesewas per litre without affecting the ex-pump price,” he said confidently, reflecting a careful balance between national interest and consumer protection, where fuel security doesn’t come at the cost of public pain.

Strategic Oversight—How the System Should Work

To ensure accountability and efficiency, Dr. Donkor proposed that strategic stocks should be ministerially controlled, with approval protocols for release and replenishment.

This governance model would prevent misuse and ensure that the strategic stock truly serves its intended purpose, creating a buffer for the market in times of disruption, not supplementing routine operations.

“Strategic stocks should be under the control of the minister. It is only when the minister says so that it should be released to the market,” he stressed.

“Even if it’s been replenished, the boss should write to the minister that we’ve had this product for three months in tanks. It’s time to replenish. And the minister will give them the approval to do that. And use the same process to restock. So it becomes a revolving,” he told The High Street Journal.

Time for Urgent Policy Action

With July approaching and market prices already creeping upward, the time for Ghana to act is now. The call is even more urgent as America just stepped into the war by bombing some nuclear sites in Iran, a move which is expected to escalate and prolong the tensions.

With Iran being a major producer of crude and the Middle East also being a strategic area for the world’s crude oil supply chain, it is just a matter of time before the world sees disruptions in fuel supply should the tensions escalate.

Dr. Kwabena Donkor’s call is not just for a new levy; it is a rallying cry for energy resilience, economic stability, and strategic foresight.

In his view, at a time when the global energy landscape and supply are becoming increasingly uncertain, failing to build a national fuel buffer is no longer an option.

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