Fuel Subsidy Regime Set for Major Overhaul: Parliament Passes Landmark Amendment Bill

By Culture Gossip! • July 31, 2026 • 3 min read

Ghana's parliament has passed a landmark amendment bill aimed at strengthening revenue mobilisation and addressing widespread abuse within the country's fuel subsidy regime. The Energy Sector Levies (Amendment) Bill, 2026, amends the Energy Sector Levies Act, 2025, in a move the government says is designed to safeguard public revenue and ensure that fuel subsidies benefit only legitimate industrial users.

Closing Loopholes in Fuel Subsidy Regime

The amendment raises the Energy Sector Shortfall and Debt Repayment Levy on fuel oil from GH¢0.24 per litre to GH¢1.93 per litre, bringing it in line with the rate applied to diesel and marine gas oil. The change is intended to plug significant revenue leakages and curb tax evasion schemes that have undermined the effectiveness of fuel subsidies designed to support industries.

According to Finance Minister Dr Cassiel Ato Forson, some individuals have been exploiting the system by purchasing diesel, disguising it as fuel oil, and fraudulently claiming tax exemptions intended for industrial users. "Some individuals are taking advantage and smuggling, buying fuel, buying diesel and disguising it as fuel oil and collecting the taxes on it," he said.

Tax Exemptions to Be Post-Importation

Under the new arrangement, companies using fuel oil for industrial purposes will pay the applicable levies upfront at the point of importation and subsequently apply for refunds. This is a change from the current system, where tax exemptions were granted ex-ante.

Dr Forson explained that the amendment does not introduce a new tax on petroleum products but rather changes the mechanism through which tax exemptions are granted. "For emphasis, there will not be a tax increase on petroleum products," he stated. "What we are saying is that we are equally going to amend the Revenue Administration Act to make the tax refund system relating to industries buying fuel oil move from 90 days to 14 days."

Estimated Losses and Future Projections

According to Dr Forson, Ghana lost an estimated US$25 million during the first half of 2026 through abuses within the fuel subsidy regime. He warned that the country stood to lose about GH¢1 billion annually if the loopholes were not closed.

The government believes the amendment will help safeguard public revenue, improve the integrity of the downstream petroleum sector, and ensure that fuel subsidies benefit only legitimate industrial users. The passage of the amendment bill is seen as a major step towards addressing the challenges facing Ghana's fuel subsidy regime.

In the coming weeks and months, the government will be working to implement the changes outlined in the amendment bill. This will involve a range of stakeholders, including industry leaders, civil society groups, and government officials. The success of the amendment will depend on the government's ability to effectively implement the changes and ensure that fuel subsidies are used for their intended purpose.

Source: Joy Online