It is emerging that not only the fisherfolk is bearing the brunt of the failed premix fuel subsidy policy, but the government and petroleum consumers are also at the receiving end.
Former Minister for Energy and a former legislator, Dr. Kwabena Donkor, reveals that there is a 3-tiered impact on the failure of a policy that was meant to support the fisherfolk in fishing communities and sustain the fishing industry.
The program, initiated years ago as a support scheme to reduce the socio-economic burdens of fishing communities in the country, is now a source of national economic loss, exploitation, and a danger to unsuspecting petroleum consumers.
The former MP for Pru East and currently a mining, energy, and governance consultant in an exclusive interview with The High Street Journal dissected the subsidy’s three-tiered failure, painting a grim picture of its cost to government, fisherfolk, and the wider public.
The Fisherfolk: Paying More Than the Subsidized Price
Ironically, the fishing community is paying a high or extra cost for fuel despite the existence of a subsidy to make it affordable. Though premix fuel is officially subsidized, currently selling at GHC 5.35 per litre with a GHC 4.15 government subsidy, the actual experience of many fisherfolk tells a different story. In areas such as Sene East, Pru West, Kpandai, Krachi, and other Volta Lake districts, the product is virtually unavailable.
According to Dr. Donkor, these communities receive less than 10% of their premix needs from the National Premix Fuel Secretariat, creating a huge scarcity situation.
To survive, fishermen have resorted to purchasing the more expensive RON 91 petrol, which currently retails at GHS 13.27 per litre, and manually downgrading it with engine oil to make it usable for their boats. A quarter gallon of engine oil, essential for this downgrading, sells at GHS 60 in Yeji. When factored in, the cost of a litre of this improvised mix rises to GHS 15.67. This is almost three times the subsidized premix price.
“The tragedy is, they are paying more now with the subsidy than they would have paid without it,” Dr. Donkor said. “If there were no subsidy, a litre of premix would cost just GHS 9.51 at full cost recovery, still far cheaper than what they are currently paying.”
The Government: A Bleeding Public Purse With No Impact
While fisherfolk struggle, the government continues to pour hundreds of millions of cedis annually into the subsidy. Yet, most of this subsidised fuel never reaches its intended destinations. Instead, it is diverted in urban centers such as Accra and Tema, where unscrupulous actors dump the cheap premix into regular petrol tanks to increase volume and profit margins, creating a thriving black market.
The result of this is a huge financial strain on the state. Dr. Kwabena Donkor reveals to The High Street Journal that currently, the government owes oil marketing companies (OMCs) over GHS 108 million in unpaid premix subsidies dating back to August 2024.
With no payment forthcoming, most OMCs have pulled out of the premix supply chain, crippling distribution. There’s virtually one OMC left signalling that interest in supplying premix has evaporated.
“The Ghanaian state is losing revenue due to the subsidy. By subsidising, the state is losing revenue. And because of that, the state, through the Ministry of Finance, has not paid OMCs involving PREMIX since August 2024. at the beginning of this month, GHC 108 million was outstanding. So the OMCs, most of the OMCs have decided not to get involved in the PREMIX business. So there is virtually one OMC left,” he narrated.
He continued, “if you are running businesses, if a subsidy, which is supposed to be a payment from the government for you to make up your cost, has not been paid since August, there is time value of money. Will you still put money in that business?”
Petroleum Consumers: Engines at Risk Due to Adulterated Fuel
Did you also know that an innocent driver’s engine is also at risk due to the failure of the premix fuel subsidy policy? Beyond government coffers and fisherfolk, the third casualty of this broken system is the everyday petroleum consumer. The high price differential between premix (GHS 5.35) and petrol (GHS 13.27) has incentivized a dangerous trend, which is the adulteration of fuel.
Dr. Donkor disclosed that the diverted premix is often blended with petrol at filling stations to stretch volumes and increase profits.
This compromises the fuel quality for unsuspecting consumers, increases wear and tear on engines, and poses a broader public safety risk.
The Way Forward: Scrap Subsidies
Given how the numerous intervention programs aimed at eliminating corruption and rent-seeking from the premix fuel distribution have failed, Dr. Donkor’s solution to this menace is the scrapping of the subsidy and allowing premix fuel to be sold at full cost.
This would not only close the gap that creates incentive for diversion, but also ensure that fishermen get the product they need at a reasonable and predictable price.
The over GHC240 million savings that will be made from the removal, he proposes targeted, transparent interventions such as zero-rating import duties on fishing gear and electrifying fishing villages with off-grid solar systems to improve livelihoods.
In his view, his proposal is not about punishing the fishermen. He says it’s about ensuring that the help meant for them actually reaches them directly, saving the state from losses, and also protecting the engines of innocent drivers.
