Ghana eliminates fuel subsidies, establishes special refinery fund
The Ghana National Petroleum Authority (NPA) has revealed that the country has put in place legal safeguards, such as eliminating fuel subsidies, to preserve stability in the downstream industry.
NPA’s CEO, Abdul Hamid, gave a presentation during the ongoing Africa Refiners and Distributers (ARDA) week 2023 in Cape Town, South Africa.
He claimed that the actions were taken in response to the policies surrounding the energy transition and the Russian-Ukrainian war’s impact on the volatility of the world oil and gas markets.
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“For the first time in 30 years, we have installed fuel caps as a measure to intervene and to control market instability,” the Ghana NPA chief said.
According to Hamid, this has aided in containing unchecked spikes in fuel and energy costs at the height of market instability since the commencement of the conflict between Russia and Ukraine.
The head of the Ghanaian NPA also discussed the “gold-for-oil” scheme, in which the nation uses its substantial gold reserves to purchase petroleum on world markets.
“We exchange gold directly for petroleum products from international firms. We buy the gold directly from large and small mining firms and exchange it with petroleum. This has stabilised our industry and kept energy prices affordable,” he said.
Speaking on more reforms implemented in the industry, Hamid said the Ghanaian government, through the NPA, has also removed energy subsidies.
“We have removed subsidies and deregulated our markets. Industries were shutting down because government was finding it hard to find the money to provide subsidies and to this day industry is being powered by investments in the private sector and there are no complains of supply,” he said.
“We are ensuring affordability and security for the vulnerable consumers through the removal of energy subsidies.”
Hamid said the NPA has also created a special fund to assist refineries in boosting their capacity to 50 barrels of oil in order to meet the country’s growing demand.
He explained that this was due to the lack of adequate refinery capacity, which he stated was one of Ghana’s major challenges impeding the exploitation of local oil and gas resources to drive energy sector growth.
“Ghana has also ensured the NPA is a one-stop-shop for everything required for firms to participate in the country’s oil and gas industry. By so doing, we have the time spent in registering and getting projects and firms up to the ground,” Hamid said.