Introduction
Governments in Greece and Ghana have independently decided to extend diesel subsidies through September, aiming to shield consumers and businesses from rising international fuel prices. The measures come as global oil markets remain volatile, with both governments citing the need to limit the impact on domestic prices.
Greece Extends Diesel Subsidy
In Greece, the Ministry of National Economy and Finance announced that the diesel fuel subsidy of €0.10 per liter (€0.08 plus VAT) will continue through September. According to the ministry, the estimated fiscal cost of extending the subsidy is €30 million. Overall, since the subsidy was introduced in April, the total fiscal cost of containing increases in diesel prices has reached €211 million.
“As international fuel prices remain at high levels, the government is continuing its targeted intervention for another month, reducing the burden on citizens and businesses and, above all, limiting the indirect effects of higher costs on the supply chain and on prices,” the Finance Ministry said in its statement.
Ghana Extends Reduction in Regulatory Margin
In Ghana, the government has decided to extend the GH¢2 per litre reduction in the regulatory margin on diesel for the next pricing window. The intervention, originally introduced as a temporary measure for two pricing windows, was expected to expire at the end of August. However, the government has opted to maintain the reduction, effectively preventing the full GH¢2 per litre regulatory margin from being restored to diesel prices.
"The decision follows growing concerns over an expected increase in fuel prices at the pumps from the first pricing window of September," reported Citi Business News. Diesel prices are currently selling at around GH¢17 per litre at most Oil Marketing Companies (OMCs).
The Chamber of Petroleum Consumers (COPEC) had been pressing the government to extend the intervention, warning that allowing it to expire could push diesel prices close to GH¢20 per litre. Executive Secretary of COPEC, Duncan Amoah, argued that maintaining the intervention would help cushion consumers from the expected upward adjustment in petroleum prices.
"Government originally had indicated it was going to do that for just two window periods, which is a month. We would want to plead that at least the next two weeks be considered again. Already diesel is around GH¢17 a litre for most of the OMCs. Allowing the GH¢2 to come back [off] would mean we will be doing GH¢19, approaching GH¢20 a litre. That situation I think the government itself is uncomfortable for," Amoah said in an interview with Citi Business News.
Broader Context and Outlook
COPEC had also projected marginal increases in petroleum prices from Tuesday, September 1, citing developments on the international oil market. Duncan Amoah said petrol prices were particularly likely to increase, following a nearly 10% rise in the commodity’s international trading price over the preceding two weeks.
The Ghanaian government introduced the GH¢2 per litre reduction in the regulatory margin on diesel effective August 4, following a surge in international oil prices that pushed up petroleum prices on the domestic market. The intervention was the government’s second major attempt to cushion consumers from rising fuel prices since tensions in the Middle East began escalating in February. The extension into September is expected to limit the immediate impact of higher international oil prices on diesel consumers and prevent a sharper increase in transport, logistics and operating costs for businesses. It will also be the government’s third attempt in mitigating rising fuel prices.
The extension could also provide some relief to households, as higher diesel prices typically feed into transportation and the cost of goods and services across the economy.