Resolving the Challenges of Premix Fuel: A Review of Ghana’s Premix Fuel Supply Chain
Premix fuel is a blend of marine mix lubricants and gasoline used as fuel for outboard motorised boats and canoes in the artisanal fishing industry. It is highly subsidized in Ghana to alleviate the challenge of high cost of fuel and provide incentives for the artisanal fisheries sector. Over the years, the allocation and supply of the fuel has faced a number of supply challenges. These challenges include diversion of the fuel from the fisheries sector and selling above government-controlled prices, all in the attempt to capture rents from the subsidies. These challenges have resulted in shortages, increased government subsidies and erratic supply of the fuel for fishing activities in the fishing communities.
Statistics from the National Petroleum Authority indicates that between 2000 and 2018, national premix fuel supply has increased form 42 million litres to about 73 million litres with an average annual growth rate of approximately 4 percent. However, there have been periods where supply goes so high. For example, in 2017, supply was 91.7 million litres due to extensive smuggling of the product and dropped to 73 million litres in 2018 when such incidence of smuggling became subject of public discussion and stringent monitoring was enforced. As at the third quarter of 2019, premix fuel supply was about 51 million litres, which is estimated to rise up to about 76 million litres by the end of 2019.
This problem has persisted in spite of the elaborate institutional structures and policy interventions governing the distribution and utilisation of the fuel. These structures include the Ministry of Fisheries and Aquaculture Development, Ministry of Energy, the Fisheries Commission, the National Petroleum Authority, the National Premix Committee and the National Premix Secretariat. Beyond this, the management, distribution and utilisation of premix fuel is governed by National Premix Fuel Committee (NPFC) Regulations, 2016 (L. I. 2233). This policy paper reviews the premix fuel supply chain in Ghana and identifies specific defects along the value chain that allow the abovementioned challenges to occur and offers solutions to resolve the challenges to ensure the efficient allocation and distribution of premix fuel for improved fishing outputs and reduce the subsidy burden on government.