The Chamber of Petroleum Consumers (COPEC) has cautioned that while government intervention to reduce fuel prices may provide short-term relief, such measures are unlikely to be fiscally sustainable if relied upon repeatedly.

The caution comes after President John Dramani Mahama approved a temporary GH¢2.00-per-litre reduction in the regulatory margin on diesel for one month, effective August 4, to cushion consumers, businesses and public transport operators against rising fuel prices.

COPEC said the intervention was understandable, noting that unchecked increases in fuel prices would trigger higher transport fares, raise the cost of goods and services, drive inflation and ultimately affect the government's fiscal targets.

It also warned that higher fuel costs could force contractors working on government projects to seek contract variations, placing additional pressure on public finances.

Speaking on Citi FM on Monday, August 3, COPEC Executive Secretary Duncan Amoah said the government's decision was not only intended to ease the burden on consumers but also to protect its broader economic objectives.

"Government would necessarily take a decision to intervene because it saves the government itself.

"If you stand aloof and allow diesel to cost GH¢20 and petrol to come to about GH¢17 or GH¢18, transport fares go up, the cost of goods and services invariably gets affected, inflation also gets impacted.

"Government contracts would be renegotiated if fuel prices reach a certain crisis point where a contractor says, 'When we were negotiating, fuel was around GH¢12, now it's GH¢20.' For which reason, I think government has not only intervened to cushion the people, but it also has to do so, so as to be able to keep its own budget objectives met."

Mr Amoah, however, warned that such interventions could become increasingly difficult to sustain, particularly under Ghana's fiscal constraints and commitments to its economic reform programme.

He urged the government to establish a strategic fuel reserve system to better manage future global oil price shocks, arguing that a long-term strategy would reduce the need for emergency subsidies while shielding consumers from sharp fuel price increases.