Premix fuel subsidies cost govt GH₵1.2bn in 8 years

Government has spent a whopping GH₵1.2 billion (GH₵1,204,511,952) as subsidy on premix fuel to cushion fishermen across the country.

2014-2021

The amount was spent between 2014 and 2021, a period of eight years.

Of most importance is the premix fuel subsidy, which is defined as the difference between the price per litre of fuel paid by the artisanal fishers and the national price applied to fuel purchases for other uses.

Capacity-enhancing subsidies

Subsidies given directly to Ghana’s marine artisanal fisheries have been identified as capacity-enhancing subsidies.

Price kept at GH₵1.57 per litres for 8 years

The price of premix fuel was kept at GH₵1.57 per litres throughout the eight years and the subsidies ranged from the lowest of 28% in 2015 to the highest of 69% in 2021.

Data from the National Petroleum Authority (NPA) shows that in 2014, the full pass through price of premix fuel was GH₵2.30 per litre.

GH₵95.3m subsidies in 2014

However, the subsidised price of the commodity was GH₵1.57, representing 32% which cost the nation GH₵95.3 million (GH₵95,351,937) in subsidies.

GH₵70.2m subsidies in 2015

In 2015, the price of a litre of premix was GH₵2.17 and since it was sold at GH₵1.57, the 28% subsidies amounted to GH₵70.2 million (GH₵70,267,173).

GH₵64.1m subsidies in 2016

For 2016, the actual price rose to GH₵2.61 per litre of premix fuel, increasing the subsidies to 40% costing the nation GH₵64.1 million (GH₵64,187,306).

The NPA data shows that the actual price of premix fuel per litre in 2017 was GH₵3.32.

GH₵137.4m subsidies in 2017

But, government still kept the selling price at GH₵1.57, leading to an increase in the subsidy to 53% for the state to pay the difference of GH₵137.4 million (GH₵137,492,789).

In 2018, the price of a litre premix fuel was still kept at GH₵1.57 though the actual price was GH₵3.39.

GH₵160.8m subsidies in 2018

This translated into 54% subsidy and this cost the government GH₵160.8 million (GH₵160,802,645).

Similarly, in the year 2019, the actual price of a litre of premix fuel again rose to GH₵4.10 per litre even though the government maintained the selling price at GH₵1.57 per litre.

GH₵172.5m subsidies in 2019

Government therefore has to cough out GH₵172.5 million (GH₵172, 596,350) to cover the 62% subsidy per litre of premix fuel.

In respect of 2020, the actual price of a litre of premix fuel dropped to GH₵3.46.

GH₵172.8m subsidies in 2020

The drop in the actual price led to a corresponding decrease in the subsidies to 55% which amounted to GH₵172.8 million (GH₵172,868,861).

GH₵330.8m subsidies in 2021

For 2021, the actual price of a litre of premix fuel rose to GH₵5.07, resulting in 69% subsidy amounting to GH₵330.8 million (GH₵330,864,891).

Efficient and equitable distribution

Measures put in place have impacted the efficient and equitable distribution of premix fuel to fisherfolk and managed to reverse the perennial challenge of shortages.

Standard premix retail outlets

The NPA, in collaboration with the Ghana Oil Company Limited (GOIL), has constructed six prototypes of standard premix retail outlets at six landing beaches across the country.

The outlets, being operated by GOIL, are located at Shama Adjoa in the Western Region, Ga Mashie in the Greater Accra Region, Komenda, Apam-Munford and Winneba, all in the Central Region, and Dzemeni in the Volta Region.

The National Premix Committee (NPC) was established by the government in July 2009 to oversee the administration and distribution of premix fuel, a heavily subsidised petroleum product.

Landing Beach Committees

Landing Beach Committees (LBCs) were formed at the various landing beaches to empower the fishermen to run premix fuel stations at the landing beaches.

Each LBC was required to select an oil marketing company to supply them with premix fuel.

Proceeds from the sale of premix fuel at the landing beaches are to be used in developing the fishing communities.

National Premix Secretariat

A National Premix Secretariat (NPS) was established to service the NPC.

The allocation and distribution of premix fuel is done by the NPS. Weekly requests for the distribution of premix fuel are sent to the Tema Oil Refinery (TOR).

TOR blends and loads the product into tankers of the assigned oil marketing companies (OMCs) for distribution to the various Landing Beach Committees.

The NPC’s mandate is to oversee the efficient and effective administration and distribution of premix fuel.

Since premix fuel is highly subsidised by the government, the NPC ensures that monitoring is enforced to avoid diversion.

The NPC also ensures that the proceeds from the sale of premix fuel are being used to develop the fishing communities.

Diverse developmental projects were undertaken by majority of the LBCs.