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Ministry wants fuel levy tied to price hikes
 
Posted on: 13-Aug-2013        
 
 
 
The Ministry of Roads and Highways is engaging the Cabinet on the possibility of linking the national fuel levy to the adjustment of prices of petroleum products.

The ministry would like a situation where the amount deducted as the fuel levy would increase automatically whenever prices of petroleum products in the country were adjusted upward.

This, it said, would ensure a steady flow of revenue into the Road Fund to be used to support the maintenance and construction of roads and other transport-related infrastructure nationwide.

The Chief Director of the ministry, Dr Samuel Darko, disclosed this at the Institute of Financial and Economic Journalists (IFEJ)/ Star Ghana Budget Advocacy Forum in Accra.

The fuel levy was introduced in 2005 to serve as an additional stream of income into the Road Fund, proceeds of which are used to develop road projects. The levy has, however, remained at six pesewas per a litre of fuel sold since its introduction. This is because efforts to increase it are yet to materialise.

Although the World Bank, which championed the introduction of the levy, had advocated the levy to be increased annually, that was yet to be done.

Given that proceeds of the levy constitutes about 87 per cent of revenue streams into the Road Fund, Dr Darko said its current amount of six pesewas per litre was too meagre to support the rising road infrastructure deficit in the country. “The road network is increasing but the funds are not coming,” Dr Darko said.

As a result, he said the ministry was exploring ways of raising steady and additional income to help match the expansion in projects.

“So we are engaging Cabinet if they can make it such that anytime the fuel prices increase, then the fuel levy will increase automatically,” he said at the forum.