Financing road construction and maintenance through a special fuel levy

The challenges of maintaining and constructing roads in Ghana are well-known, and despite efforts, the country’s road infrastructure still faces serious shortcomings.

One of the most pragmatic and equitable solutions lies in financing road projects through a special levy on fuel consumption, rather than relying on traditional road tolls or burdening the budget with insufficient funds.

In this article, I will argue for the implementation of a fuel levy that funds road construction and maintenance while eliminating road tolls and abolishing vehicle insurance and roadworthy certification fees.

I will also propose the creation of a pension scheme for commercial drivers tied to safety performance.

This solution is not only fair but also progressive in its structure. It taps into the fundamental relationship between fuel consumption and road use, ensuring that the more you use roads, the more you contribute to their upkeep.

This strategy can generate substantial revenue—potentially up to $1 billion annually—while maintaining fairness across all road users.

The Logic of a Fuel Levy for Road Funding

Every vehicle that consumes fuel uses the road. Whether it’s a passenger vehicle, bus, truck, or motorcycle, roads and vehicles are inseparable in functionality. The more you drive, the more fuel you consume, and the more you wear down the road.

A fuel levy calculated per litre is, therefore, an equitable way to ensure that road users contribute fairly to road maintenance and construction based on their actual usage of the infrastructure.

Unlike road tolls, which are fixed at certain points and tend to inconvenience drivers through congestion and wasted time, a fuel levy is seamless and straightforward.

Drivers pay as they refuel—no extra stops, no toll booths. It’s a system where payment is directly proportional to road usage, making it inherently fair. If you use roads extensively, you pay more; if you use them less, you pay less.

Sweeteners for Vehicle Owners and the Public

The removal of road tolls in 2021 was celebrated by many Ghanaians who had long been frustrated with the inefficiencies and delays caused by tollbooths. This should be maintained, as road tolls have proven cumbersome and are not scalable in today’s era of high traffic volumes.

In addition to keeping the tolls removed, this policy can also offer further incentives. I propose abolishing fees for vehicle insurance and roadworthy certificates, instead funding these through the enhanced fuel levy.

This approach removes the upfront cost burden on drivers and vehicle owners while spreading the cost over time based on actual road use.

Under this scheme, vehicle insurance and roadworthy certification will still be mandatory, but their costs will no longer be paid out-of-pocket. Instead, drivers would contribute incrementally every time they refuel, eliminating the need for large one-time payments.

For the average vehicle owner, this would represent a much less stressful and more predictable system for maintaining legal compliance and vehicle safety standards.

Commercial Vehicle Driver Pension Scheme

To further enhance the equity of this system, I propose the establishment of a pension scheme for commercial drivers, funded by the fuel levy. The scheme would be tied to drivers’ safety records, rewarding those with excellent safety histories and long-standing service.

This pension would serve as both an incentive for safer driving and a social safety net for drivers who often face financial insecurity after retirement.

Commercial drivers, who log more miles and use more fuel, would naturally contribute more to the fund, but they would also receive more benefits.

The pension would help improve the long-term welfare of Ghana’s drivers, while the safety record criteria would encourage responsible driving behavior, reducing accidents and making the roads safer for everyone.

Fairness and Equity of the Levy System

One of the key strengths of this system is its fairness. Unlike the fixed fees associated with road tolls or insurance payments, the fuel levy is flexible and usage-based. You only pay when you refuel, and the amount you pay is directly tied to how much you use the road.

If a driver rarely uses the roads or drives a fuel-efficient vehicle, they will naturally pay less. Conversely, those who use the roads heavily, such as commercial drivers and long-distance travelers, will pay more, as they are using the infrastructure more extensively.

This is a pay-as-you-go system that reflects real road use, rather than an arbitrary or fixed payment system.

This model ensures that contributions are based on usage, making it one of the most equitable ways to fund road construction and maintenance. Those who benefit most from the roads will contribute the most, while casual road users will not be disproportionately burdened.

It also alleviates concerns over funding road maintenance from general taxation, which often spreads the cost to those who may not even use the roads frequently.

Generating $1 Billion Annually for Ghana’s Roads

Based on fuel consumption rates in Ghana, a revised fuel levy of 3.93 cedis per litre could generate the desired $1 billion in annual revenue for road maintenance and construction. Ghana consumes roughly 4 billion litres of fuel per year, and with a levy of 3.93 cedis per litre, the country could raise around 15.72 billion cedis per year.

At the current exchange rate of 15.7 cedis to 1 USD, this translates to approximately $1 billion USD annually (calculated as 15.72 billion cedis ÷ 15.7 = $1 billion USD). This would provide a significant and sustainable source of funding for Ghana’s road infrastructure, ensuring that roads can be maintained and expanded without relying on road tolls or traditional forms of taxation.

Engaging Stakeholders for a Successful Policy Rollout

For this policy to succeed, it is essential to engage all relevant stakeholders. This includes vehicle owners, transport unions, commercial drivers, road contractors, and government agencies. Public communication will be key to ensuring that road users understand the fairness and benefits of this system.

A nationwide awareness campaign, led by the Ministry of Roads and Highways in collaboration with the Ministry of Transport and the National Insurance Commission, should explain the levy’s purpose and its advantages over the current system. The campaign should also highlight the removal of road tolls and the abolition of direct fees for vehicle insurance and roadworthy certificates as sweeteners to make the policy more palatable to the public.

Additionally, regular feedback sessions with transport unions and road user associations will ensure that concerns are addressed and the system is continuously refined to serve the needs of the public.

Conclusion

The introduction of a fuel levy to finance road construction and maintenance in Ghana is not only feasible but also the most equitable solution. By linking road use directly to fuel consumption, this policy ensures that those who use the roads most contribute proportionally to their upkeep. The removal of road tolls, along with the abolition of vehicle insurance and roadworthy certificate fees, will make the policy even more attractive to drivers.

Furthermore, the introduction of a pension scheme for commercial drivers, tied to safety records, would ensure that drivers are rewarded for safe driving and secure a retirement plan. This policy can generate $1 billion annually, providing a consistent and reliable source of funding for road infrastructure in Ghana.

This idea was first proposed for the 2021 mid-year budget review but was unfortunately diluted by the introduction of the e-levy, and road tolls were removed without a sustainable alternative for road funding. Now is the time to revisit and refine this solution for the benefit of all Ghanaians.