Ghana�s Dead Economy Can�t Afford Fuel Subsidy � IMANI Ghana

Executive Director of IMANI Ghana, Franklin Cudjoe says Ghana is economically dead and cannot afford to continue subsidizing petroleum products. He was of the opinion that government does not have the needed funds to keep providing subsidies and wondered why the situation persists if not for �political expediency.� �If it is not for political expediency, why should we be doing things we can�t necessarily handle?� he asked. Some major cities across the country are experiencing acute shortage of fuel. This occurred due to the failure of government to settle its debt of GHC1.8 billion to Bulk Oil Distribution Companies (BDCs). International suppliers of petroleum products have since refused to supply the BDCs with petrol and diesel unless the BDCs pay their accumulated debt. Government has therefore released an amount of $60 million to offset some of the debt in a bid to resolve the fuel shortage. The National Petroleum Authority (NPA) in June, 2013, announced the removal of fuel subsidies by government in a bid to reduce budget deficit. Subsequently, consumers were expected to bear the full cost of petroleum products. This resulted in the frequent upward adjustment of the petroleum prices using the Automatic Adjustment Formula. Public outcry on the issue forced government to re-introduce fuel subsidies in April 2014. According to the IMANI boss, it is no surprise the debate on fuel subsidies has resurfaced �because we never really learned our lessons so in a very panicky mode, we have to speak to this issue again.� Speaking at Citi FMs Roundtable discussion on Fuel Subsidies, Mr. Cudjoe said even though Ghana is economically dead, the government has been �postponing our funeral almost every time.� He was of the opinion that removing fuel subsidies is only a matter of �common sense� because �you can�t promise people things you don�t have.� Mr. Cudjoe said it is wrong to compartmentalize poverty which informs government�s decision to subsidize certain essential products such as petrol, electricity, water and fertilizer. He indicated that government is only �boxing itself into some problems� by subsidizing fuel and therefore, suggested that instead of subsidizing essential products, government should rather embark on socio-economic interventions like transportation. He said emphatically that �government is broke� and is currently indebted to many government institutions and so �the last thing you would want the government to continue doing is to impose a subsidy. �The whole idea of subsidy should not look on poverty as if it was a compartmentalized product,� he added.