- Fuel Levy Cash Clears IPP Debts and Restores Ghana’s Credit Standing — PURC Boss
The Public Utilities Regulatory Commission says proceeds from the GHS 1.00 Energy Sector Levy on petroleum products have been used to clear critical power-sector debts, settle obligations to Independent Power Producers and restore Ghana’s credit standing with international financiers.
Executive Secretary of the PURC, Dr Shaffic Suleman, said the levy has played a decisive role in stabilising Ghana’s electricity value chain at a time when the sector continues to face a large financing gap despite tariff adjustments.
Speaking on JoyNews’ PM Express Business Edition, Dr Suleman said revenue from the levy has been used to address accumulated obligations that were weighing heavily on Ghana’s power-sector credibility.
“We’ve also paid off the accumulated debt that was putting Ghana’s credit rating at a very terrible outlook… so we’ve paid and restored that World Bank risk guarantee with ENI. So it’s now making Ghana look so good, and our credit rating has also taken shape,” he said.
According to him, the funds have also gone into payments to gas suppliers under key production agreements, including obligations linked to the Sankofa Gye Nyame gas project and other gas supply arrangements.
The disclosure provides a clearer picture of how the government has been using the controversial petroleum levy to manage long-standing liabilities in the energy sector.
The GHS 1.00 levy was introduced as part of efforts to raise dedicated revenue for energy-sector stabilisation. Its imposition came at a time when the power sector was struggling with arrears to generation companies, gas suppliers and other critical service providers.
While consumers have complained that the levy adds to the cost of fuel and transport, the PURC’s explanation suggests that government sees it as a necessary fiscal instrument to prevent deeper instability in the electricity sector.
Dr Suleman indicated that about GHS 8.00 billion has so far been mobilised and channelled into clearing priority obligations in the sector.
These include payments to Independent Power Producers, gas suppliers and other counterparties whose unpaid bills had placed pressure on the energy value chain.
The restoration of the World Bank-backed risk guarantee with ENI is particularly significant.
Such guarantees are used to give investors and suppliers confidence that contractual obligations will be honoured. When those arrangements weaken or are drawn down without proper replenishment, Ghana’s credibility with lenders, investors and energy suppliers can suffer.
By restoring the guarantee, the government is seeking to rebuild confidence in the country’s ability to meet its obligations in the power and gas sectors.
That confidence matters because Ghana’s electricity supply depends heavily on private generation companies, gas suppliers and international financing arrangements.
If the country fails to pay on time, suppliers may reduce flexibility, demand stricter payment terms or price in higher risk. In extreme cases, non-payment can threaten fuel supply, power generation and investor appetite for future energy projects.
The PURC chief’s remarks therefore underline the link between domestic utility payments, government fiscal support and Ghana’s broader financial credibility.
Energy-sector arrears are not only a problem for power producers. They can become a sovereign credibility problem.
Ghana’s electricity sector has for years operated under financial strain, with tariffs often falling short of full cost recovery while commercial losses, unpaid bills, legacy power purchase obligations and foreign exchange exposure continue to widen the funding gap.
This has forced successive governments to rely on levies, budgetary support, debt restructuring arrangements and periodic tariff reviews to keep the sector functional.
The latest tariff review, which takes effect on July 1, 2026, will raise electricity tariffs by 3.49% and water tariffs by 0.85%.
The PURC has defended the adjustment, arguing that it is necessary to reduce revenue shortfalls and preserve service reliability.
But Dr Suleman’s disclosure also shows that tariff adjustments alone are not enough.
In a related explanation, he said government still provides about US$92.00 million every month, in addition to what consumers pay through tariffs, to keep the lights on.
That figure exposes the scale of the structural financing gap in the electricity sector.
Even after consumers pay their monthly bills and tariffs are reviewed, the state still has to inject significant resources to meet generation and fuel costs.
This is why the Energy Sector Levy has become central to the government’s current stabilisation effort.
Fuel levies feed into transport costs, business operating expenses and household budgets. When Ghanaians pay more at the pump, they expect to see improvements in power reliability, billing fairness and sector accountability.
If the levy clears debts but inefficiencies remain, public confidence will weaken.
The PURC’s explanation therefore places responsibility not only on government, but also on utilities and regulators.
The Electricity Company of Ghana must improve collections, reduce commercial losses and strengthen billing accuracy. Power producers and fuel suppliers must be paid transparently and on time. Government must avoid accumulating new obligations. PURC must ensure that tariffs are justified, carefully managed and linked to performance.
The financial burden of Ghana’s electricity sector cannot be solved by consumers alone.
But consumers also cannot be shielded entirely from the real cost of power supply.
The challenge is to ensure that every cedi collected through tariffs and levies produces measurable improvement in reliability, debt reduction and sector efficiency.
Dr Suleman’s comments offer a strong defence of the levy from the regulator’s perspective.
They suggest that the fuel levy has helped Ghana repair critical parts of its energy-sector balance sheet, restore confidence with international partners and reduce some pressure on Independent Power Producers and gas suppliers.
But the same disclosure also reveals how vulnerable the sector remains.
A system that needs tariff revenue, levy proceeds and US$92.00 million in monthly government support is not yet financially healthy.
The next phase must therefore focus on preventing fresh arrears, enforcing payment discipline and improving the efficiency of the electricity value chain.
Ghana has used fuel levy cash to stabilise the power sector.
The harder task now is to reform the sector so that stabilisation does not become a permanent emergency.
