Date: June 20, 2012, 9:05 am



The issue of petroleum subsidy though not new to policy discourses in Ghana, has not been exhaustively debated in a manner that will convince the majority of Ghanaians of the merits and demerits of such policy decision. 


The debate on petroleum subsidy was on the 29th of May, 2012 rekindled by the International Monetary Fund whose Head of Delegation, Catherine Daseking, called on Ghana to end costly subsidies on fuel. According to her, petroleum subsidy cost the nation some 60 million cedis a month ($31.9 million).  The IMF position, which the NDC government appears to support, is that energy subsidy benefits the rich more than the poor. 


The Minister of Finance and Economic Planning, Dr. Duffour agrees that the removal of subsidies would have a positive impact on Ghana's economy.  He believes that taking the subsidy on petroleum and spending that money on education or health will have a positive impact on Ghana’s economy.   His Deputy Minister, Fiifi Kwettey, has however assured Ghanaians that the government has no plans to remove subsidy on petroleum products. Rather, government was looking at how the subsidy policy could be maintained while ensuring it did not become a drain on its finances.


The back and forth on the subject is reminiscent of a similar debate in the 1990s during which the  World Bank sponsored a Poverty and Social Impact Assessment (PSIA) study on the policy.  The report however was never made public for the purpose of open discussions on its findings.

While the Integrated Social Development Centre (ISODEC) welcomes the decision and pledge by the government to maintain the subsidy on petroleum products, the rights-based policy research and advocacy organisation believes now is the time for dispassionate public debate on the detailed mechanics of the subsidy and its real beneficiaries.  The issues of how much subsidy Ghanaians enjoy on their fuel consumption, who benefits most from the subsidy, the implications of subsidy withdrawal on government's budget and others need to be further explored to inform future actions especially within the development of a national long term development vision. 


This debate is expected to provide further input into the Social Pact document being developed by Ghana’s civil society, led by ISODEC, particularly in respect of whether or not Ghana maintains petroleum subsidy as a pro-poor strategy, or how the immediate poverty and social impacts of a subsidy withdrawal are to be mitigated should we decide to go for that option. The Social Pact is a project that sets out to achieve a national consensus on broad principles on which Ghana is to be governed. It is expected to provide the framework for monitoring and assessing the performance of successive government on how they advance the aspirations of the people.


There will be two presentations, one on “The economy wide impact of petroleum subsidies removal” and the second on “FUEL SUBSIDIES IN GHANA: Who pays and Who Benefits.”    The papers would be subjected to critical review by two separate panels and open to further debate by participants.


 The programme is being organized by ISODEC, in collaboration with Public Agenda and Citi FM.


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