Ghana: Diesel Subsidies Cannot Be Sustained, CBOD CEO Says

The Chief Executive Officer of Ghana’s Chamber of Bulk Oil Distributors (CBOD), Patrick Kwaku Ofori, has warned that the government’s diesel subsidy is unsustainable and could come at the expense of investment in the country’s energy infrastructure.

The government announced the removal of some regulatory margins on petroleum products as part of measures to cushion motorists from rising pump prices following the escalation of the conflict in the Middle East.

The subsidy was introduced in April, with consumers currently receiving a subsidy of 2 Ghanaian cedis per litre of diesel.

Speaking on Accra-based TV3, Ofori said the subsidies were affecting the ability of state agencies to expand and invest in modern refining facilities.

He said funds spent on the diesel subsidy during the period under review could instead have been used to procure more than 200 buses for busy routes, including Accra-Kasoa, Mamponteng, Pankrono and Kejetia, while subsidised fuel supplied through GOIL could have been used to support vulnerable consumers.

“For how long will you continue? It’s going to be tighter as it continues at the expense of infrastructure that will help move products through the BRV system to all parts of the country,” he said.

Ofori said government entities such as the Bulk Oil Storage and Transportation Company (BOST) may not be able to publicly raise concerns about the policy, but warned that its effects could eventually be seen in fuel quality if marketers and quality assurance providers were not paid promptly for their services.

He also questioned how the government was financing the subsidy and whether it intended to borrow against the balance sheets of state-owned entities to sustain BOST and other state agencies.