The Centre for Environmental Management and Sustainable Energy (CEMSE) has called for product-specific petroleum tax cuts after diesel prices surged 63% between February and April 2026, warning that a one-size-fits-all approach risks fiscal instability without adequately protecting consumers.
A sharp and rapid surge in petroleum product prices, driven by the outbreak of war in Iran involving American allies, has pushed Ghana's energy policy into crisis mode.
CEMSE is now calling on the government to move beyond vague commitments and adopt a targeted, product-specific tax relief framework before the cost shocks become impossible to contain.
Scale of the Price Shock
The numbers are stark. Between the first pricing window of February 2026 and that of April, the floor price of diesel jumped from GHC 10.47 per litre to GHC 17.10 per litre — a 63% increase in less than two months.
Petrol fared somewhat better but still rose by approximately 36%, climbing from GHC 9.80 to GHC 13.30 per litre. Liquefied Petroleum Gas also recorded an 18% increase, moving from GHC 9.05 to GHC 10.71 per kilogram.
The ripple effects have been immediate. Commercial Transport Operators across the country are demanding government approval to increase transport fares, placing the government under intense public pressure.
Beyond the transport sector, CEMSE warns that unchecked fuel price increases pose a significant threat to Ghana's broader macroeconomic stability — particularly inflation, which had only recently returned to single digits after a painful multi-year disinflation journey.
Why a Uniform Tax Cut Will Not Work
The government has already introduced some tax relief measures within the petroleum price build-up. However, CEMSE argues that the design of those cuts has been communicated ambiguously and lacks the product-level precision needed to be effective.
Applying the same rate of tax reduction across diesel, petrol, and LPG ignores the significant differences in their price levels, consumption patterns, and economic impact.
"A one-size-fits-all tax reduction risks undermining fiscal stability without effectively addressing the price disparities across products," the organisation states in its policy brief.
Instead, CEMSE advocates for what it describes as a balanced or neutral tax regime — one that is progressive, efficient, and calibrated to each product's specific market conditions.
What CEMSE Is Proposing
Under the CEMSE framework, petrol would receive a total tax cut of GHC 0.50 per litre, with targeted reductions spread across the Energy Sector Shortfall and Debt Repayment Levy, the Road Fund Levy, the Primary Distribution Margin, and the BOST Margin.
Diesel, which has absorbed the steepest price increase and carries the heaviest economic weight through transport and logistics costs, would receive a deeper cut of GHC 1.00 per litre, with reductions applied across several levy components including the UPPF and the Road Fund Levy.
CEMSE also proposes a temporary one-month relaxation of the Cylinder Recirculation Margin for LPG, currently set at USD 80 per metric ton.
CEMSE has done the fiscal arithmetic. Based on 2025 consumption data, the GHC 0.50 cut on petrol would cost the government approximately GHC 142 million monthly, while the GHC 1.00 diesel cut would result in a monthly revenue loss of GHC 253 million.
Adding the LPG measure brings the total monthly cost of the intervention to approximately GHC 422 million.
The organisation argues this gap is bridgeable without undermining fiscal discipline. Ghana's upstream petroleum sector is expected to generate windfall gains of approximately GHC 264 million per month based on a crude oil price of $100 per barrel and a one-million-barrel lifting.
The Unified Petroleum Price Fund, which regularly accumulates surplus income, generates an estimated GHC 320 million in annual surpluses — resources that CEMSE argues could be deployed to close the financing gap for the duration of the intervention.
A Call for Precision Over Politics
CEMSE's conclusion is direct: "Petroleum products differ significantly in terms of market prices and consumption impacts."
"Therefore, the government should apply product-specific tax cuts rather than uniform ones. This targeted approach will cushion consumers and protect the economy without jeopardizing Ghana's fiscal stability." - CEMSE
With global energy markets remaining volatile and domestic pressure from transport operators mounting, the window for a measured, technically sound response is narrowing.
The CEMSE proposal offers the government a credible path — one that protects Ghanaian households and businesses while keeping the country's hard-won fiscal recovery firmly intact.
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