Two entities are calling for the reopening of debate to scrap subsidies on fuel.
According to the Chamber for Bulk Oil Distribution Companies (CBODC)
and the National Petroleum Authority (NPA), there was the need for a
public debate on whether or not the government should continue spending
millions of cedis on subsidies, instead of channelling the money into
the provision and improvement of infrastructure.
The government
currently owes bulk oil distribution companies (BDCs) about GHc1.3
billion, representing subsidies on petroleum products from July 2011 to
December 2013.
The failure on the part of the government to settle
the debt on time has compelled the banks to withdraw letters of credit
(LCs) for the importation of finished petroleum products.
International
suppliers of petroleum products placed a week’s supply of petrol and
diesel under lock and key until the BDCs settled their debts.
The situation resulted in acute shortage of petrol and diesel across the country last week and early this week.
The problem got so precarious that long and winding queues began forming at most petrol dumps across the country.
In
the ensuing struggle for fuel products, motorists had to park their
vehicles, walk long distances in search of petrol and diesel, while
others decided to join public transport to work and other destinations.
Government debt and subsidy
In
an interview with the Daily Graphic yesterday, the CEO of the CBODC, Mr
Senyo Hosi, said those scenarios were likely to be repeated if the
government continued to subsidise petroleum products.
Calling for a debate on the issue, he said “the government cannot maintain this trend”.
Position of BDCs
While
complaining that his members were faced with huge losses as a result of
the government’s inability to pay its debts on time, Mr Hosi said the
drift had to end because there was no point in sustaining the subsidy
when the government had failed to make provisions for debts accruing on
subsidies in its budget.
He agreed with the fact that the social
needs of Ghanaians needed to be met and said it was imperative for the
government to take into consideration whether or not the very persons at
which the subsidies were targeted were, indeed, benefitting.
He
suggested the introduction of other social intervention mechanisms to
benefit the poor, instead of holistically subsidising fuel which, in the
long run, benefited the elite the most.
“Scrap subsidies in their
entirety because they are hurting the industry, the banks, the
government and the consumer. You cannot continue to subsidise while you
incur huge debts without coming out with clear-cut mechanisms on how to
clear them on time,” Mr Hosi told the government.
Fuel situation so far
Touching on the fuel shortage situation, he explained that the problem had improved tremendously.
He said more than 22 million litres had so far been pumped into the system to mitigate the effects of the shortage.
Mr Hosi gave an assurance that the situation would normalise by close of work on Thursday.
He disclosed that the BDCs were working around the clock to ensure that things got back to normal.
NPA on subsidies
For
his part, the Public Relations Officer (PRO) of the NPA, Mr Yaro
Kasambata, said in as much as subsidies were not bad, it was important
for the government to approach the issue holistically.
He
indicated that the removal of subsidies was better because it would
ensure debts did not pile up to create general inconvenience, as was
being experienced by consumers, the very people the subsidies were meant
for.
“There is a spill-over effect in the banking sector because
it places a huge burden on the financial sector and the government,” Mr
Kasambata noted.
The subsidies being recorded now, according to
him, were price differentials on petroleum products which the government
had absorbed on behalf of consumers.
While admitting that issues
on subsidies were a government policy, he noted that the only way the
government could sustain confidence in the petroleum industry was to do
away with subsidies entirely.
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