Dr. Mahamudu Bawumia’s assertion that the Mahama administration is imposing a “harsh tax regime” through the newly introduced energy levy deserves closer scrutiny. While taxes are never a popular subject, the realities behind the Energy Sector Recovery Levy (GHC 1 per litre) reveal a far more nuanced situation than the former Vice President suggests.
1. Context: Inherited Energy Sector Debt Originated Under the NPP
One of the primary justifications for the new GHC 1 levy on fuel is to address the ballooning energy sector debt, which according to Finance Minister Dr. Cassiel Ato Forson, stood at US$3.1 billion as of March 2025. This debt did not accumulate in just six months under President Mahama.
Much of this debt was inherited from the previous NPP administration, which failed to adequately fund the energy sector and oversaw several Power Purchase Agreements (PPAs) without securing sustainable financing. For example:
Between 2017 and 2023, the NPP government signed numerous PPAs leading to excess capacity charges amounting to over US$320 million annually, according to energy analysts and former Energy Minister John Jinapor.
The NPP’s own Energy Minister, Dr. Matthew Opoku Prempeh, admitted in 2021 that Ghana was paying over GHC 17 billion for unused electricity due to take-or-pay contracts signed under the NPP’s watch.
2. Comparing the “Dumsor Levy” to E-Levy is Misinformation
Dr. Bawumia equated the new energy levy to being “eight times the E-Levy,” which is grossly misleading. Let’s look at the math:
The controversial E-Levy was a 1.5% tax on electronic transfers, which affected everyone, including small businesses and individuals, regardless of their income.
The new GHC 1 per litre levy only affects petroleum consumption, not mobile money transfers or bank transactions. So if someone buys 10 litres of fuel, they pay GHC 10. This is not an across-the-board digital tax.
In fact, according to the Finance Ministry, the real impact on prices will be neutralized by a stronger Cedi, meaning fuel pump prices may not even go up in the short term.
3. This Levy Is Transparent and Targeted – Unlike the E-Levy
The Energy Sector Levy (Amendment) Bill, 2025, aims to raise GHC 5.7 billion annually, all earmarked to:
Pay down existing energy sector debts
Secure fuel for power generation to prevent power outages (i.e., “dumsor”)
Prevent the collapse of independent power producers, many of whom threatened to shut down due to non-payment
This is very different from the E-Levy, which was originally justified as a revenue generation tool but was not transparently linked to any particular sector. The E-Levy also failed to meet its revenue target by over 83%, according to the Auditor-General’s 2022 report.
4. The NPP Also Imposed or Increased Over 25 Taxes
Under Bawumia’s leadership as head of the Economic Management Team:
The COVID-19 Health Levy was introduced
The Financial Sector Cleanup Levy was added
The Luxury Vehicle Tax (later withdrawn due to public outrage) was implemented
The E-Levy, Benchmark Value Reversals, and GH¢100 annual property rate were all enforced
Between 2017 and 2023, the NPP increased or introduced over 25 taxes and levies, despite campaigning on a promise to reduce the tax burden. So, the claim that the NDC is acting hypocritically rings hollow when placed against this track record.
5. The Energy Levy Is an Economic Necessity, Not a Political Choice
According to Dr. Forson, Ghana needs US$3.7 billion to clear the debt and US$1.2 billion to buy fuel for power generation in 2025. Without resolving this, the country risks a return to power outages (dumsor), a situation no government or citizen wants.
Choosing not to act on this crisis would have led to power shortages, job losses, and economic stagnation.
6. Ghana’s Macroeconomic Instability Was Caused by Reckless Borrowing, Not Taxation
Ghana’s entry into an IMF programme in 2023 was triggered by:
High debt-to-GDP ratio (over 100%)
Ballooning domestic debt due to unsustainable borrowing during the COVID-19 era
Debt restructuring under the Domestic Debt Exchange Programme (DDEP), which wiped out savings and collapsed confidence in the economy
These conditions were created under the Bawumia-led economic team, not the NDC. Fixing the fiscal gap now requires difficult but responsible policy choices, including targeted levies like the energy tax.
Conclusion: Dr. Bawumia’s Attack is Politically Motivated, Not Economically Honest
The GHC 1 levy on petroleum is not a symptom of a harsh regime, but a pragmatic policy designed to fix an inherited mess. Unlike the sweeping and regressive E-Levy, the current levy is:
Targeted
Transparent
Economically necessary
Bawumia’s comparison lacks depth and fails to acknowledge the real cause of Ghana’s energy debt. Rather than politicizing the recovery process, the focus should be on building a sustainable economy where citizens don’t suffer power outages and rising debt.
The Mahama administration is choosing responsible governance over political convenience—a path that may be unpopular in the short term, but essential for Ghana’s long-term stability.
