The African Centre for Energy Policy (ACEP) has urged the government to discontinue the premixed fuel subsidy policy, citing rising debts, inefficiencies, and corruption as key reasons for its failure.
Instead, ACEP suggests that direct financial support for fisherfolk would be a more effective means of assisting them with fuel purchases, bypassing the flaws inherent in the current subsidy system.
Kodzo Yaotse, Policy Lead for Petroleum and Conventional Energy at ACEP, highlighted several issues with the subsidy, including discrepancies in fuel consumption patterns. ACEP’s data points to an irregular increase in the usage of premixed fuel in areas that have little need for it, raising suspicions of smuggling. This not only deprives legitimate users in the fishing community but also diverts critical resources meant to support them.
The ACEP report notes that the GH₵680 million in annual revenue generated from the Price Stabilisation and Recovery Levy (PSRL) is being misused by vested interests with little benefit reaching the intended beneficiaries, the fisherfolk. Additionally, ACEP has uncovered evidence of hidden margins on petroleum products, such as unjustified taxes that add to the financial burden on consumers.
Yaotse referenced a study conducted by ACEP that revealed significant discrepancies in petroleum product pricing. The National Petroleum Authority (NPA) 2024 consumption data shows that levies in the downstream petroleum sector amounted to GH₵9.7 billion. However, margins imposed on these products, which are not subject to parliamentary oversight, total GH₵7.6 billion. Some of these margins have increased significantly over recent years, with certain levies like the Bulk Oil Storage and Transportation (BOST) margin rising by up to 429 percent between 2018 and 2024.
ACEP also pointed out that many of the levies, particularly those linked to the energy sector, are being used to cover past inefficiencies rather than benefiting consumers or addressing current needs. The organization also questioned the need for consumers to pay GH₵0.26 per litre of petrol for primary distribution, especially since over 50% of petroleum products are transported outside BOST facilities.
To improve transparency and accountability, ACEP advocates for the commercialization of BOST and its listing on the stock exchange. This, they argue, would help reduce the financial burden on consumers and ensure that funds are used more efficiently.
In conclusion, ACEP suggests that the government should focus on addressing the energy sector’s mounting debts in the short- to medium-term to unlock more resources for development, ultimately leading to better outcomes for the country’s energy policies.