Former Power Minister Dr. Kwabena Donkor has defended the controversial GH¢1 levy on petroleum products, insisting it is not a new tax but an adjustment to an existing levy aimed at rescuing Ghana’s struggling power sector.
Speaking in an interview, Dr. Donkor emphasized that the levy, passed by Parliament on June 3, is critical for addressing the country’s deepening energy sector debt and ensuring a reliable electricity supply.
Dr. Donkor explained that Ghana’s power sector has faced liquidity challenges for years, primarily due to under-recovery of costs, which has led to mounting debt.
“This is not a new levy. Government is just adding to the quantum. So government has not introduced a new levy,” he clarified.
He warned that without structural reforms, the debt will continue to rise despite new revenue measures.
“If we don’t do that, we’ll keep adding to the debt. We already referenced $3.1 billion as of March, and that figure will keep growing.”
Dr. Donkor stressed that solving the crisis requires more than just raising revenue.
“Increasing revenue dedicated to the legacy debt is just one leg. The other leg will have to be to drive down cost in the power sector, to raise efficiency, and make sure that at the minimum, we break even.”
While acknowledging the financial burden the levy places on households and businesses, Dr. Donkor insisted that stable electricity cannot come free.
“You want the lights on? Then you have to fix the system. And that means funding it properly. Raising money is only half the job. Efficiency and cost control are the other half. Without both, we’re back to square one.”
