Why Fuel Prices in Ghana Continue to Rise — And What February 2025’s Adjustments Mean for Consumers

Fuel pricing in Ghana continues to remain one of the most sensitive economic and social issues in the country. Every adjustment influences the cost of transportation, food prices, business operations, inflation trends, and household spending. As Ghana navigates a fluctuating global energy market, tax pressures, and domestic supply constraints, fuel price movements regularly dominate public discourse.

As February 1, 2025 approaches, the Chamber for Petroleum Consumers (COPEC) has projected another marginal increase in the prices of petrol, diesel, and Liquefied Petroleum Gas (LPG). While these changes may appear moderate, they are a reflection of deeper structural issues that continue to shape Ghana’s petroleum market.

In this evergreen analysis, we explore the latest projections, why fuel prices keep rising, and what long-term measures could ease the burden on consumers.

Fuel Prices Set for Marginal Increases in February 2025

According to COPEC, barring any unforeseen circumstances, the upcoming pricing window (February 1–15, 2025) is expected to see slight increases across all major fuel products.

Projected Fuel Prices

• Petrol: Expected to rise by 2.93%, selling at an estimated GH¢14.697 per litre

• Diesel: Expected to rise by 3.00%, selling at an estimated GH¢15.869 per litre

• LPG: Estimated to sell at GH¢17.224 per litre

These increases, though marginal, will have immediate implications for transport fares, production costs, and household energy expenditures—especially for families relying on LPG for cooking.

Why Are Prices Rising Again?

Fuel price adjustments in Ghana are influenced by several interlinked factors. The current projected increases are driven by global market dynamics, local currency depreciation, and high taxation on petroleum products.

1. Global Oil Price Movements

International crude oil prices continue to fluctuate due to geopolitical tensions, production cuts, and changing demand patterns. When global oil prices rise, the cost of importing finished petroleum products increases, directly affecting pump prices in Ghana.

2. Exchange Rate Pressures

The depreciation of the Ghanaian cedi against the US dollar significantly impacts petroleum pricing. Since fuel imports are dollar-denominated, even marginal shifts in the exchange rate translate into higher import and distribution costs.

COPEC has emphasized the need for a mechanism that allows levies to adjust with forex movements, arguing that a fixed tax structure becomes punitive when the cedi weakens.

3. High Taxes and Levies

Currently, taxes and levies represent 21.34% of the retail prices of petrol and diesel. These include:

• Energy Sector Levy Act (ESLA) charges

• Energy Fund Levy

• Road Fund Levy

• Sanitation and Pollution Levy

• Special Petroleum Tax (SPT)

This means consumers pay a substantial premium before even accounting for the raw cost of the product. As global and currency conditions worsen, these taxes make each price adjustment more pronounced.

COPEC’s Call for Tax Reductions and Policy Reforms

COPEC has once again emphasized the urgent need for government intervention to reduce the tax burden on fuel products. The organization believes that lowering fuel taxes—or removing certain levies altogether—would help cushion consumers and support economic stability.

Key Points from COPEC’s Recommendations:

• Reduce or eliminate some taxes on petrol and diesel to ease price pressures.

• Cut taxes on LPG to encourage adoption and reduce reliance on firewood, which contributes to deforestation and environmental degradation.

• Introduce a flexible levy system that varies taxes depending on the cedi/dollar exchange rate.

• Rehabilitate and operationalize the Tema Oil Refinery (TOR) to reduce dependence on imported finished products.

These recommendations are rooted in the belief that Ghana’s fuel pricing structure is overly dependent on importation and taxation—both of which make prices highly volatile.

The Case for Promoting LPG Use

One of COPEC’s strongest appeals concerns LPG. With the price of LPG projected to increase to GH¢17.224 per litre, many households may be forced to revert to firewood or charcoal, both of which are harmful to the environment and contribute to health problems.

Increasing LPG prices undermines Ghana’s long-term goal of expanding clean cooking energy access. COPEC argues that government intervention—either through subsidies or tax relief—is essential to:

• Improve affordability

• Promote safer cooking practices

• Reduce deforestation

• Lower carbon emissions

• Protect public health

By making LPG more accessible, Ghana can significantly reduce its environmental footprint and improve quality of life nationwide.

Why Reviving TOR Matters More Than Ever

Ghana’s heavy reliance on imported refined fuel products exposes the country to global price shocks. The Tema Oil Refinery has been dormant for years, operating far below capacity and contributing little to domestic supply.

COPEC argues that restoring TOR’s operations could:

• Reduce import dependency

• Lower transportation and distribution costs

• Improve fuel quality control

• Enhance energy security

• Create jobs and support local industry

While fixing TOR requires substantial investment and structural reforms, the long-term benefits far outweigh the costs. Countries with strong refining capacity—such as South Africa—experience more stable fuel pricing due to reduced exposure to external shocks.

The Broader Economic Impact of Fuel Price Increases

Fuel price adjustments ripple through every sector of the economy. Even marginal increases can have outsized effects on consumer spending and business operations.

Economic areas affected include:

• Transport fares, which often rise after fuel price hikes

• Food prices, due to higher transportation and production costs

• Manufacturing, especially SMEs with high energy needs

• Inflation, as fuel is a major driver of price increases

• Household budgets, especially for low-income families

• Public services, including sanitation, health, and education logistics

In short, fuel pricing is not an isolated issue—it is a foundational part of the economy.

Long-Term Solutions for Stabilizing Fuel Prices

To address persistent volatility, Ghana must adopt long-term strategic solutions. These include:

1. Restoring TOR’s refining capacity

A functional refinery reduces import dependency and provides greater control over fuel supply and pricing.

2. Reviewing tax policies

A more flexible tax structure can prevent extreme price shocks when the cedi weakens.

3. Strengthening forex reserves

A stronger currency reduces import costs and stabilizes pricing windows.

4. Expanding renewable energy investments

Transitioning to locally sourced energy—including solar and biofuels—reduces pressure on petroleum imports.

5. Enhancing petroleum sector governance

Transparent pricing mechanisms and efficient regulatory oversight improve public trust and market stability.

FAQs

1. Why are fuel prices increasing in February 2025?

The increases are driven by global oil price trends, exchange rate pressures, and high taxation on petroleum products.

2. How much will petrol and diesel cost?

Petrol is projected at GH¢14.697 per litre, while diesel will sell at an estimated GH¢15.869 per litre.

3. Why is LPG becoming more expensive?

LPG prices reflect global cost movements and high domestic taxes. COPEC is calling for tax reductions to improve affordability.

4. What percentage of fuel prices are taxes?

Taxes and levies account for 21.34% of the retail prices of petrol and diesel.

5. How can Ghana stabilize fuel prices long term?

Key strategies include reviving TOR, reviewing taxes, improving forex reserves, and scaling up renewable energy investments.

Source: The High Street Business