A new fuel tax law to help stop smugglers from cheating the system in Ghana has been passed by Parliament.
Parliament passed the new law on Friday (July 31, 2026) to close a loophole that some businesspeople have been using to dodge fuel taxes — a scam that has already cost the country an estimated $25 million in just six months.
What the new law does
The law, called the Energy Sector Levies (Amendment) Bill, 2026, changes an existing law.
It raises two charges on fuel oil: the Energy Sector Shortfall and Debt Repayment Levy and the Road Fund Levy.
The Minister of Finance, Dr Cassiel Ato Forson had indicated that this was not a new tax on ordinary Ghanaians, and it will not raise fuel prices at the pump.
Graphic Online’s Nana Konadu Agyeman, reports that Parliament passed the Energy Sector Levies (Amendment) Bill, 2026 to enhance revenue generation in the downstream petroleum sector.
The Bill is to amend the Energy Sector Levies Act, 2025 to increase the Energy Sector Shortfall and Debt Repayment Levy (ESSDRI) as well as the road fund levy on fuel oil.
It will address significant leakages and abuses within the government’s fuel subsidy programmes, particularly those intended to support industry.
These leakages have enabled some beneficiaries to exploit the subsidies for private gain, thereby undermining the integrity of the subsidy regime and distorting competition, thus defeating the objective of reducing production costs for industry.
It is expected to bridge the price differential gap between oil fuel (GH¢0.24 per litre) and diesel (GH¢1.93 per litre) under the ESSDRLevy.
Diesel and fuel oil are chemically very similar, almost identical, but they are taxed very differently.
Diesel is taxed at about GH¢3.35 per litre, while fuel oil — because it’s meant to help industry keep costs down — is taxed at a much lower GH¢0.24 per litre.
Some traders have been buying diesel, relabeling it as “fuel oil,” and pocketing the tax difference — essentially smuggling under a different name.
Based on five years of data, Ghana should normally use around 5 million litres of fuel oil a month. But between January and June this year, that jumped to over 20 million litres a month — a nearly 500% increase. That spike is the clearest sign the scam has been happening on a large scale.
Dr Forson said this isn’t the first time such a trick has surfaced. A similar scheme once involved marine gas oil, and the government stopped it by taxing that product the same as diesel. Once that loophole closed, smugglers apparently just switched to exploiting fuel oil instead.
Graphic Online’s Nana Konadu Agyeman reports that the Bill was introduced in Parliament on Friday, July 31, 2026 by the Minister of Finance, Dr Cassiel Ato Forson, and was referred to the Finance Committee, with the leadership of the Committee on Energy for consideration.
Tax evasion scheme
Presenting the explanatory memorandum ahead of the bill’s passage, the Minister of Finance, Dr Cassiel Ato Forson, made it clear that the government was not seeking to introduce or impose a new taxi on Ghanaians.
He said the government had noticed a tax evasion scheme in the downstream petroleum industry and there was an urgent need to cure such scheme.
He said there had been a potential revenue loss of about $25 million in the last six months from January to June this year.
That, he said, stemmed from the fact that diesel had been misclassified as fuel oil by certain individuals.
He indicated diesel was almost the same as fuel oil but diesel attracted taxes of GH3.35 per litre, while fuel oil attracted tax of GH¢0.25 per litre.
He pointed out that when the Finance Ministry conducted the time series analysis, on average every month fuel oil that should be sold in the country using the time series analysis for the last five years meant that government of Ghana should be selling five million litres per month for fuel oil.
“But Mr Speaker, strangely we have seen that from January to June this year that fuel oil has gone up and instead of the five million litres per month there is 20 million litres plus per month.
“In fact, this represents a 493 per cent increase over the last year,” he said.
Incentive for smuggling
Dr Forson explained that the incentive for such abuse was because there was clearly a huge tax arbitrage as result of which some individuals were taking advantage and smuggling by buying diesel and disguising it as fuel oil and collecting their taxes on it.
He informed the House that the government’s intention was that it would continue to give that tax exemption to industries.
However, he said instead of ex-ante that tax exemption would be ex-post.
“Mr Speaker, ex-ante simply put is you get a tax exemption ahead but now you get a tax exemption ex-post. You have to pay for it as industry and claim the refund.
“Mr Speaker, this will not amount to a tax increase,” he said.
No increase on petroleum products
Dr Forson informed the House that fuel oil was not used by motorists but used by industry, and emphasised that there would be no tax increase on petroleum products.
He said when an amendment to the Energy Sector Management Act was introduced last, the ministry equally saw a surge in smuggling by some individuals who used the marine gas oil.
“Mr Speaker, what we did was that we stemmed it by levelling the taxes on diesel to marine gas oil and all of a sudden, such smuggling has stopped,” he said.
Going forward, Dr Forson said since January this year, the Finance Ministry had seen that the scheme had been moved from marine gas oil to fuel oil.
“So 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 moving from 90 days to 14 days.
“Mr Speaker, in the meantime, the GRA Commissioner General will issue a practice note so that using that practice note that tax exemption will be given to them in 14 clear days,” he said.
Such measure, he said, was to make sure that the government would reduce the costs of fuel smuggling.
He warned that if care was not taken, the state would lose in excess of GH₵1 billion per annum on the back of smuggling.
