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Pilolo approach to fuel subsidy won’t work - IMANI
From: Ghana | Myjoyonline.com | Isaac Essel          Published On: February 13, 2013, 15:00 GMT
 
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Pilolo approach to fuel subsidy won’t work - IMANI

Franklin Cudjoe


IMANI Ghana Executive Director Franklin Cudjoe suspects that government’s outcry over petrol smuggling was meant to distract the public from its inability to remedy to the problem of fuel subsidies draining the national coffers.

He told Evans Mensah on Joy FM’s Top Story that until the government recognizes the subsidy issue as an economic problem, using soldiers to chase petroleum product smugglers will amount to naught. The “fright effect,” he insisted, is not effective.

The business of smuggling fuel to neighbouring countries has become lucrative because the Ghanaian government continues to subsidise petroleum products, making fuel prices in Ghana lower than in other countries.

Mr Cudjoe explained that the issue of fuel smuggling has affected Ghana for years and appealed to government to stop treating it as a recent occurrence.

Accusing successive government administrations of not being transparent on the subsidy issue, he said that credible reports show that the groups targeted by the price reductions are, ironically, not the primary beneficiaries of the interventions.

“There is a World Bank study which has proven that on the 6 per cent of all energy subsidies actually reach bottom 20 per cent of the poor, and all 55 per cent of all energy subsidies actually get used up by the top 20 per cent rich.”

He stressed the need to have a frank discussion on whether the current subsidies are effective, challenging government to facilitate a dialogue on the subject.

“I think the government should not feel shy to open a proper discussion on the absurdities of the subsidies that we have already, especially when we do know that the subsidies are not properly targeted,” he said.

Mr Cudjoe also criticised the “frefrekobo,” to wit, the government’s ad hoc attempts to resolve the situation.

He cautioned government against relying on “what I call pilolo [a form of child’s play,] I don’t think it helps the debate at all.”

The Executive Director for IMANI said a report by the German Development Organisation accused Ghana of being “a bad child” in the sub-region on petroleum pricing. He therefore suggested a unified price regime across the sub region to address fuel cost woes.

He also recommended that government further deregularise the petroleum industry.


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