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Ghana’s Fuel Pricing Formula: Taxes, Margins, and Exchange Rates Explained

  • bernard boateng
  • Apr 2
  • 3 min read

Updated: 10 hours ago

Introduction

Fuel prices affect everyone — from commercial drivers to ordinary citizens trying to balance their monthly budget. Yet, many Ghanaians aren’t aware of how the final price at the fuel station is actually determined. This article breaks it down using data from the pricing window of 16–31 March 2025.


Ghana’s Fuel Pricing Formula for Petrol
Ghana’s Fuel Pricing Formula for Petrol

Fuel prices in Ghana are shaped by a combination of international market dynamics and domestic policies. To comprehend the intricacies, it's essential to dissect the components that contribute to the final price at the pump.


1. Ex-Refinery Price (Xpi) – The Base Cost

This represents the price at which Oil Marketing Companies (OMCs) acquire fuel from importers or refineries. It's determined by:​

  • World Market Price: The global benchmark price per metric ton of fuel.​

  • Exchange Rate (Spot FX & FuFex30): Given that Ghana imports petroleum products, fluctuations in the USD/GHS exchange rate significantly impact pricing.​

  • CBOD Benchmark Premium: This premium accounts for importation and operational costs.​

  • Volume Conversion Factor: A metric to liter conversion factor, standardizing measurements for pricing.​

As of the latter half of March 2025, the ex-refinery price was GHS 9.4320 per liter, constituting approximately 60.9% of the final pump price.​


2. Taxes, Levies, and Regulatory Margins

Upon arrival in Ghana, several government-imposed charges are added to the fuel price:​

  • Energy Debt Recovery Levy

  • Road Fund Levy

  • Special Petroleum Tax

  • Price Stabilization and Recovery Levy

  • Bulk Oil Storage & Transportation (BOST) Margin

Collectively, these taxes and levies amounted to GHS 3.2700 per liter in March 2025, representing 21.1% of the total fuel price.​


3. Marketing, Distribution, and Retail Margins

Post taxation, additional costs are incorporated to cover:​

  • Transportation and Distribution: Costs associated with moving fuel from depots to retail outlets.​

  • Operational Expenses of OMCs: Day-to-day running costs of Oil Marketing Companies.​

  • Retailer Margins: Profits for fuel stations.​

In the same period, these components summed up to GHS 2.7880 per liter, accounting for 18% of the pump price.​


4. Final Ex-Pump Price

Aggregating all the aforementioned components, the final price consumers paid at the pump in March 2025 was GHS 15.49 per liter for both petrol and diesel.​

Factors Influencing Price Fluctuations

Fuel prices are not static and can vary due to:

  • Global Crude Oil Price Changes: Variations in international oil prices directly affect the ex-refinery price.​

  • Exchange Rate Fluctuations: A depreciating cedi against the dollar can elevate import costs, even if global prices remain stable.​

  • Adjustments in Government Taxes and Levies: Policy changes can lead to the introduction or removal of certain charges, impacting the final price.​


Comparative Analysis: Ghana vs. USA

As highlighted by Elias Amissah, CFA, during this period, petrol prices in the USA were approximately $0.82 per liter, whereas in Ghana, they hovered around $1.00 per liter. This disparity underscores the influence of local taxes, levies, and exchange rates on fuel pricing.​


The Path Forward: Domestic Production Initiatives

To mitigate the heavy reliance on imports and the associated vulnerabilities, Ghana has been exploring avenues to bolster domestic production:​

  • Petroleum Hub Development: The government announced plans to establish a massive industrial complex in Jomoro, aiming to position Ghana as a leading refiner in West Africa. This ambitious project envisions the construction of multiple refineries with a combined capacity of 900,000 barrels per day by 2036. However, challenges related to funding and declining domestic crude production pose significant hurdles. ​

  • Potential Imports from Dangote Refinery: Ghana has expressed interest in sourcing petroleum products from Nigeria's Dangote Oil Refinery once it reaches full capacity. This move could reduce dependence on European imports and potentially lower domestic fuel prices. 


Conclusion

Understanding the multifaceted components that determine fuel prices in Ghana is crucial for informed discourse on economic policies and consumer expectations. While global factors play a significant role, domestic policies, taxes, and infrastructural developments are equally pivotal. As Ghana navigates its energy future, a balanced approach that considers both international market dynamics and local initiatives will be essential to ensure price stability and economic resilience.


The article and visual was inspired by a LinkedIn post by Elias Amissah and can be found here

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