Ghana under pressure to stop subsidising fuel

The International Monetary Fund (IMF) is mounting pressure on Government to make consumers pay full cost for utility services they enjoy.

According to IMF, government’s intervention through subsidies for utility services offered to consumers does not augur well for service providers since Government does not honour its commitments to them sometimes.

Government presently bears part of the production costs of utility companies to prevent consumers from paying for the full cost of utility services.

Christina Daseking, Head of the Africa Department of the IMF, who confirmed the stance of her outfit on the issue to journalists in Accra, said it would be unwise for government to continue to subsidise utility costs of consumers with its present financial situation.

Describing the move as tantamount to undermining the viability of public companies in the energy sector, Ms Daseking stated that such a situation kept private investors out of the market and also contributed to under-investment in the energy sector.

Noting that such a proposal to Government was intended for the good of the economy, she called on government to completely remove subsidies on the prices of petroleum products.

Ms Daseking further explained: “These subsidies go disproportionately to people who consume a lot of fuel and these people are those who are at the higher income level. We have said this in the past and we will continue to say that fuel subsidies should be removed and replaced by targeted spending to those people who need support.”

Energy & Petroleum Minister, Emmanuel Armah Kofi Buah, noted that Government was working to ensure that consumers pay realistic utility tariffs to attract more private sector power producers into the energy sector.

Meanwhile, the Public Utilities Regulatory Commission (PURC) has reiterated that it would only endorse the request by power producers to increase tariffs if they offer quality services.