ACEP calls for urgent reform of petroleum taxation and margins in Ghana.
ACEP calls for urgent reform of petroleum taxation and margins in Ghana.
ACEP calls for urgent reform of petroleum taxation and margins in Ghana.
The Africa Centre for Energy Policy (ACEP) has expressed deep concern about inefficiencies and a lack of transparency in Ghana’s downstream petroleum sector, urging urgent reforms to alleviate the financial burdens on consumers.
Speaking at a press conference in Accra on Wednesday (15 January), Kodzo Yaotse, Policy Lead for Petroleum and Conventional Energy at ACEP, stated.
“The petroleum taxation framework in Ghana is riddled with inefficiencies that affect consumers unfairly, while the funds generated are not being used effectively to support national development.”
According to ACEP, Ghana’s taxation and levies on petroleum products rake in over GHC9.7 billion annually.
These include the Energy Debt Recovery Levy, Road Fund Levy, Energy Fund Levy, and Special Petroleum Tax (SPT).
“Only the Special Petroleum Tax, which generates about GHC2.4 billion, provides unencumbered resources for national development,” Yaotse emphasised.
“The rest are tied to debt servicing in the energy and road sectors, leaving little for infrastructure development.”
The organisation also flagged concerns over regulatory margins such as the BOST Margin, Primary Distribution Margin (PDM), Unified Petroleum Price Fund (UPPF), and Cylinder Recirculation Model (CRM) Margin, which collectively generate over GHC7.6 billion annually.
These margins have seen significant increases over the years, but ACEP questioned the value they deliver.
“Between 2018 and now, the BOST Margin has risen by 300%, the UPPF by 429%, and the PDM by 247%, yet consumers have little to show for these increments,” Yaotse remarked.
On the role of the Bulk Oil Storage and Transportation Company (BOST), ACEP noted that its deviation from maintaining strategic stock to engaging in commercial activities has created unfair competition in the market.
“BOST’s Gold for Oil Program now controls about 20% of the petroleum market, but it continues to benefit from tax-free status. This puts private businesses, which pay taxes, at a disadvantage,” Yaotse pointed out.
ACEP further criticised the Primary Distribution Margin for its lack of transparency, stating:
“Consumers are charged GHp 26 per litre for transporting petroleum, whether or not BOST facilities are used. More than half of petroleum products bypass BOST facilities, raising questions about the rationale for this charge.”
The organisation also questioned the effectiveness of the Unified Petroleum Price Fund, which collects nearly GHC5 billion annually to ensure uniform fuel prices nationwide.
“There is no clear evidence that abolishing this fund would significantly increase fuel prices in remote areas,” Yaotse argued.
Regarding the Cylinder Recirculation Model (CRM), ACEP highlighted its inefficiencies and lack of accountability.
“The CRM generates GHS 381 million annually, yet its impact on improving access to Liquefied Petroleum Gas (LPG) is debatable. These funds could be redirected to government coffers for broader development projects,” Yaotse proposed.
ACEP also spotlighted the corruption surrounding the premix fuel subsidy, which generates about GHC680 million annually.
“The current system has become a conduit for syphoning money through fraudulent practices, leaving fisherfolk, the intended beneficiaries, underserved. We recommend abolishing the subsidy and replacing it with direct financial support to fisherfolk,” Yaotse suggested.
In response to these challenges, ACEP proposed converting regulatory margins into direct tax revenues, potentially freeing over GHC6.3 billion annually for critical infrastructure projects such as Free Senior High School programmes or highway construction.
Additionally, ACEP advocated for the commercialisation of BOST, suggesting it be listed on the stock exchange to enhance transparency and efficiency.
As public frustration over high fuel prices continues to grow, ACEP’s call for greater accountability and efficiency in Ghana’s petroleum sector could not be more timely.
“It is imperative for policymakers to act swiftly to address these inefficiencies, as the current system is unsustainable,”
