Finance and Energy Policy Analyst, Richmond Eduku

Finance and Energy Policy Analyst, Richmond Eduku, has thrown his support behind the recent GH¢1 increment in the Energy Sector Recovery Levy (ESLA), describing it as a “strategic and necessary intervention” to prevent the collapse of Ghana’s power sector and restore fiscal stability.

In a Facebook post, Eduku noted that while the levy has drawn mixed reactions, it is a targeted solution to Ghana’s ballooning energy sector debt, currently estimated at over US$3.1 billion, with an additional US$1.8 billion needed for urgent fuel procurement.

“This is not just another tax. It is a carefully designed rescue package for a sector that underpins our entire economy,” Eduku explained.

“If we don’t act now, we risk relapsing into erratic power supply, stalled industrial growth, and even higher debt accumulation.”

According to him, the GH¢5.7 billion in expected annual revenue from the levy will be ring-fenced, meaning it will not go into the government’s Consolidated Fund but will be exclusively used to service energy debts and ensure fuel availability to power plants.

“Unlike previous levies that disappeared into budgetary black holes, this one comes with built-in transparency mechanisms. It will be independently audited, and the funds will be directly applied to clear arrears and keep the lights on,” he added.

Eduku also pointed out that the new levy comes alongside a broader rebalancing of the tax regime, highlighting that the Mahama administration has scrapped several regressive taxes that placed heavier burdens on ordinary Ghanaians.

These include the controversial E-Levy, which taxed digital transactions, the Betting Tax, which impacted youth income among others.

“If you do a proper fiscal analysis, you’ll see that the overall tax burden on the average Ghanaian has actually gone down. So, while the ESLA increment adds a bit of cost on fuel, it replaces other harmful and regressive taxes that we’ve now eliminated,” Eduku wrote.

Eduku emphasized that the timing of the increase was ideal, noting that recent appreciation of the Ghana cedi, combined with declining world oil prices, has helped to stabilize fuel prices.

“Under the previous administration, we were seeing fuel prices hit GH¢23 per litre. Today, prices are closer to GH¢11–GH¢13, and the cedi is much stronger. This gives government the flexibility to introduce a targeted levy like this without sparking immediate inflation,” he noted.

Energy Security and Long-Term Reforms;

Eduku stressed that the levy will help ensure uninterrupted electricity supply, especially for businesses and manufacturing, by financing fuel procurement and debt payments to Independent Power Producers (IPPs) and fuel suppliers.

“We can’t talk about economic recovery or industrialization if we can’t keep the lights on. This levy is essential for maintaining power stability and keeping factories, hospitals, and schools running,” he stated.

He added that the government’s plan to gradually transition from expensive liquid fuels to natural gas, with more supply expected from the Sankofa, Jubilee, and TEN oil fields, and the West African Gas Pipeline (WAGP), will eventually reduce the cost burden on the energy system.

Recommendations for Accountability and Sustainability

While backing the policy, Mr. Eduku called on the government to take bold reform measures to ensure the success of the ESLA initiative:

1. Establish an ESLA Oversight Committee with civil society and parliamentary representation;
2. Publish quarterly audit reports on ESLA revenue usage;
3. Accelerate investment in gas infrastructure to reduce reliance on diesel;
4. Renegotiate high-cost power purchase agreements (PPAs);
5. Expand lifeline tariff subsidies to protect vulnerable households.

“If we manage this well, the ESLA levy will not be remembered as a burden but as a turning point, a necessary step that helped us stabilize the power sector and build the foundation for economic transformation,” Eduku concluded.

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