Scrap premix fuel subsidy - Committee urges gov't

The Petroleum Downstream Sector Reforms Committee (PDSRC) recommends ending the premix fuel subsidy. They cite mismanagement and corruption as key reasons.

A report from the committee, shared with the Ghana News Agency (GNA), states that the subsidy has not helped artisanal fishers. Instead, it has led to diversion and illegal sales.

The committee suggests using savings from abolishing the subsidy to develop fishing communities. This would ensure real benefits reach those who need them.

The report describes the premix fuel sector as plagued by systemic issues. It highlights problems with distribution and usage that undermine its goals of stabilizing prices and supporting fisherfolk.

From 2023 to early 2024, a regional breakdown showed concerning trends. The Northern and former Bono regions had consumption spikes of 322% and 190%, respectively. These areas have little legitimate use for premix fuel.

In contrast, coastal regions like Western (-4%), Central (21%), and Greater Accra (13%) saw much lower increases. This suggests large-scale smuggling and diversion are occurring.

The report claims that nearly all GHS 680 million in annual revenues from the Price Stabilisation and Recovery Levy (PSRL) is misused through the subsidy. This money does not benefit fisherfolk directly.

The PSRL was introduced in 2015 under the Energy Sector Levies Act (Act 899). It aimed to stabilize fuel prices, subsidize premix fuel, and cushion petroleum-related shocks. Since then, Ghanaians have contributed over GH¢3 billion to this fund.

However, only a small portion of this money has been used as intended. The levy has never stabilized prices for other fuel types.

The committee's recommendation aligns with calls for reform from civil society groups and energy policy think tanks. The Africa Centre for Energy Policy (ACEP) has long pushed for ending the premix subsidy due to inefficiency and corruption.

Similarly, the Environment and Natural Resource Research Initiative (NRRI) argues that ending the subsidy is vital for protecting marine ecosystems and promoting sustainable fishing practices.