The implementation of the Energy Sector Levy (Amendment) Act, 2025, also known as the “dumsor levy,” in Ghana has sparked significant controversy and criticism, particularly from Kojo Oppong Nkrumah, the Ranking Member of Parliament’s Economy and Development Committee. This new levy, which imposes a GHS1 tax per litre of fuel, aims to generate GHS5.7 billion annually to address the country’s mounting energy sector debts and secure fuel for power generation. However, Oppong Nkrumah argues that the timing of this levy is deeply flawed, as it coincides with a period of cedi appreciation, depriving Ghanaians of much-needed economic relief. He contends that instead of benefiting from the strengthening currency, citizens are now burdened with an additional tax that will exacerbate the cost of living and fuel prices.
Oppong Nkrumah’s primary concern revolves around the levy’s detrimental impact on the cost of living. He maintains that the government’s assurances regarding minimal price increases are misleading and that the levy will have a far-reaching cascading effect throughout the economy. The increased cost of fuel will inevitably translate to higher transportation costs, which in turn will affect the prices of goods and services, especially food. Farmers, who rely on fuel for their machinery, will face increased production costs, leading to higher food prices for consumers. This, coupled with the general inflationary pressure exerted by the levy, will erode the purchasing power of ordinary Ghanaians and further strain household budgets.
The timing of the levy’s implementation is a critical aspect of Oppong Nkrumah’s critique. He emphasizes that the cedi’s recent appreciation provided an opportunity for Ghanaians to experience some relief from economic pressures. The strengthening currency should have naturally led to lower import costs, including fuel, which would have translated into lower prices for consumers. However, the introduction of the dumsor levy effectively negates these potential benefits, robbing Ghanaians of the economic respite they deserved. Instead of capitalizing on the favorable exchange rate to alleviate economic hardship, the government has chosen to impose an additional tax burden, deepening the financial strain on its citizens.
Oppong Nkrumah further elaborates on the cascading effects of the fuel levy, highlighting its impact on key sectors such as agriculture and transport. The increased cost of fuel will directly affect transportation costs, impacting commuters, businesses relying on logistics, and the overall distribution network. This will contribute to higher prices for goods and services across the board. In the agricultural sector, the increased fuel cost will burden farmers, impacting their ability to cultivate and transport produce. This will inevitably lead to higher food prices, exacerbating food insecurity and further burdening already struggling households.
The projected 8% price increase resulting from the levy, as highlighted by Oppong Nkrumah, raises serious concerns about its overall impact on the economy. Such a significant price hike could potentially trigger further inflation and erode consumer purchasing power, leading to a decline in economic activity. The added burden on businesses, particularly small and medium-sized enterprises (SMEs), could stifle growth and investment, further hindering economic development. The ripple effects of this levy could have far-reaching consequences, impacting various sectors and exacerbating existing economic challenges.
Oppong Nkrumah’s criticism underscores the importance of considering the broader economic context and the potential consequences of such levies. While the government’s intention to address energy sector debts and secure fuel supply is understandable, the timing and implementation of the dumsor levy appear ill-conceived. By imposing an additional tax burden during a period of potential economic relief, the government risks undermining the positive effects of the cedi’s appreciation and exacerbating the financial hardship faced by ordinary Ghanaians. A more comprehensive and nuanced approach is required to address the energy sector challenges without unduly burdening the citizens and further straining the economy.
