Government suspension of subsidy on residual fuel oil (RFO) to ease the financial burden on the Price Stabilisation and Recovery Account (PSRA) has compounded challenges for the textile industries, forcing the likes of Tex Styles Ghana Limited (TSG) to shut down a couple of times this year.
Emmanuel Debrah Kissi, Sales Director at Tex Styles Ghana, disclosed the adverse impact of the complete withdrawal of subsidy on RFO to the country’s textile industry.
“At the start of the year, the subsidy on RFO was 55%, then it was slashed by 15% around July and completely suspended at the start of November.
“Our utility cost has really gone up since then. We are paying the full 100 percent price for the cost of RFO, and it is actually becoming a challenge getting it.”Mr. Emmanuel Debrah Kissi
Adding up, Mr. Debrah Kissi further cautioned the country of a likely shortage in textiles for the in coming days.
“What’s available will last the nation till end of December, if we don’t get Bulk Distribution Companies (BDCs) to bring in some stocks. This year, we’ve had to shut down about twice or thrice based on the unavailability of RFO subsidy.”Mr. Emmanuel Debrah Kissi
RFO Removal Is To Ensure Product Availability
Abass Ibrahim Tasunti, Head of Economic Regulation for National Petroleum Authority (NPA), defending the need for the withdrawal of RFO subsidy disclosed that, the initiative was meant to ensure availability and supply of the product-a low grade of fuel oil, which contains the undistilled residue from atmospheric or vacuum distillation of crude oil, and is mostly used by manufacturing industries.
According to him, due to the increase in global fuel prices and exchange rates, funds accrued through the Price Stabilization and Recovery Levy used in paying for subsidies on RFO and premix fuel were not enough to meet the demand.
“Last year, government paid importers an accumulated subsidy of GH¢136million on RFO, and the inability of the Price Stabilization and Recovery Account (PSRA) to meet debt demands resulted in a refusal by importers to sell the product, causing supply challenges for the industry.”Mr. Abass Ibrahim Tasunti
Mr. Ibrahim Tasunti further declared government’s debt of more than GH¢154million, representing subsidy on RFO from January to September this year. Only GH¢15million of the debt, which covers January to March, 2022 for subsidy, has been paid, with the total amount for April to September, 2022 yet to be paid, he said.
“The policy directive takes consideration of growing concern about sustainability, of the Account to meet under-recovery payment obligations for premix fuel and RFO.”A letter issued by the National Petroleum Authority (NPA)