Several papers have explored the political economy aspects of Ghana’s energy
and natural resources sectors, including those of oil and gas (Obeng-Odoom
2015); mining (Nyame and Grant 2014); electricity planning (Abdul-Salam and
Phimister 2016); and timber (Hansen and Lund 2011). Nor is there any shortage
of literature on the political economy of postcolonial states (Bernstein 2015;
Bezemer, Bolt, and Lensink 2014; Fisher Onar, Liu, and Woodward 2014;
Power 2009; Yufanyi Movuh 2012).
In contrast, this chapter specifically examines recent aspects of subsidy reform
in Ghana through a political economy lens. Its focus is the set of reforms in the
petroleum sector since about 2001. Although a rich, ongoing set of issues is being
addressed in the power sector, those issues are beyond the scope of this brief
analysis.
Despite a series of subsidy reforms in Ghana since 2001, they have not been
sustained because of inconsistency in implementation. Reforms have often been
suspended after the executive branch intervened in the full pass-through of
world prices to domestic prices. Meanwhile, subsidy programs have caused tremendous
fiscal strain on the government. Past subsidy reform processes were not
sustained for many reasons, among them the lack of an adequate mitigation
strategy that could help sustain automatic price increases, lack of stakeholder
consultation, poor communication, and lack of clearly defined roles.