The downstream petroleum sector in Ghana has become a symbol of entrenched crony capitalism and evidence of black tax on citizens. Whilst the taxes and levies on petroleum products may appear insignificant (about 13% of the cost of the product), the state imposes about 10% of the cost of petroleum products as additional charges in the form of regulatory margins, a consequence of government’s failure to completely liberalise the petroleum market.

Since the partial liberalization of the market in 2015, consumers have been forced to bear the weight of the government’s failure to properly regulate the sector. Instead of using petroleum consumption as a tool for generating revenue for development, it has become an avenue for financing government inefficiencies and off-budget expenditures through levies imposed by parliament and margins imposed by the NPA. Stakeholders in the sector have raised concerns regarding the opacity in how regulatory margins are spent, pointing to a disconnection between revenue collection and the intended public welfare maximisation.  Oil and LPG Marketing Companies (OMCs/LPGMCs) have also persistently bemoaned the duplicitous nature of margins in the downstream sector.

In this brief, the various taxes and margins are unpacked to show how inefficient Ghana manages the downstream sector to the disadvantage of the tax-paying masses.