Government is asking Ghanaians to appreciate its decision to implement the deregulation of the prices of petroleum products where it will no longer subsidise the prices ever again.
Subsidies, the Labour minister, Haruna Iddrisu, argued, is hurting the economy. The evidence, he told Joy FM and MultiTV’s current affairs programme, Newsfile
Saturday, is that government spends GH¢78 million every month because of subsidies.
“We need to take a decision on whether you want to continue to be able to do this or not” he stated.
Ghana’s deregulation policy hatched in 2005 under the John Kufuor government, entered its final phase last Tuesday after government washed its hands off the pegging of petroleum products.
The immediate effect was a 4% jump in petroleum prices the same day of the announcement. The jump is already triggering another round of price increases in goods and services such as transport fares.
Economists predict that July inflation numbers will show the real economic effect of the petroleum price increase.
Discussing the deregulation policy on Newsfile, Haruna Iddrisu dismissed the perception fueled by the Minority that deregulation is a result of IMF conditionalities.
“The emphasis of our partnership with the IMF is to see how we can reduce fraud on the payroll”
The decision by government to remove the contentious issue of subsidies with general elections 18 months away shows that “for president Mahama and government, it is not about what is easy or what is difficult. It is about what is right but it comes with a price and a cost”
He explained that the Kufuor-led government established the National Petroleum Authority and the passage of LI 2186 which was to ensure full-cost recovery in the petroleum sector.
He explained that deregulation initiated by Kufuor liberated the sector to allow greater participation of private Oil Marketing Companies and also allowed companies known as Bulk Oil Distributors to go ahead and import crude.
These functions were formerly restricted government roles.
Moving the liberalization regime further, the Mahama government, he said, has now liberalized the determination of petroleum prices.
Lauding the move, he said it will allow regular supply of petroleum products which is fundamental to any economic activity.
“What is important for government is the continuous free flow of petroleum products”
Nonetheless, he welcomed a debate on ways government could help the poor who are most hurt by government’s removal of subsidies.