The Institute for Energy Security (IES) has welcomed the government's decision to subsidise diesel by GH¢2 per litre, describing it as a timely intervention that will help cushion consumers against rising fuel prices and ease inflationary pressures.

Speaking on Joy FM's Top Story on Monday, August 3, Senior Research and Policy Analyst at IES, Derek Emmanuel Xatse, said the announcement aligns with the institute's earlier recommendation that government step in to protect consumers from the impact of surging global oil prices.

"That is good news for all Ghanaians because IES earlier this morning also put out a press release suggesting that government should act immediately to cushion consumers. Having this response is good news for all Ghanaians and stakeholders in the energy sector," he said.

He noted that rising fuel prices affect every segment of the economy, whether commercial operators, private businesses or individual consumers.

"One way or the other, we are all affected, whether for commercial activities, private businesses or other things," he added.

While welcoming the intervention, Mr Emmanuel Xatse said he would have preferred the subsidy to also cover petrol consumers.

"Who would have thought that it could be extended to cover petrol consumers? That would have been another good news for us. But be that as it may, what we have right now is a measure that the government has implemented, and in a nutshell, it's to cushion consumers."

He cautioned, however, that the subsidy is unlikely to be sustainable over an extended period because of the significant financial cost involved.

"If we want to look at the quantum of money that the government is going to spend for this period, just look at what government spent when the war started. That was a huge amount of money, running into millions of cedis," he said.

According to him, the uncertainty surrounding global crude oil prices makes it impossible to predict how long government may need to maintain the intervention.

"This is something that is volatile. Nobody can guarantee whether it will last for a week, two weeks, three weeks or four weeks," he said.

Mr Emmanuel Xatse stressed that subsidies are temporary measures and should not be viewed as a permanent solution to fuel price volatility.

"What we know is that these are not long-term measures."

He expressed hope that geopolitical tensions driving global oil prices would ease through diplomatic efforts, allowing crude prices to return to levels seen before the current conflict.

"What is also happening is that we always know there will be a roundtable discussion where probably there can be a ceasefire, and then prices will restore or come back to where they were before the war started," he said.

The energy analyst further argued that the government's intervention could help contain inflation by preventing transport operators from increasing fares.

"As you can hear, the transport unions are agitating for an increase in transport fares. When they increase their prices, there is no way that within the next two weeks or the second pricing window for August, they will be willing to reduce transport fares," he explained.

He warned that higher transport fares would feed into broader inflation and reduce consumers' purchasing power.

"That will definitely erode our purchasing power," he said.

Looking ahead, Mr Emmanuel Xatse said government must pursue longer-term measures to protect consumers, including strengthening the cedi, which has recently come under pressure.

"The cedi for the past weeks has also been depreciating, which is not good for Ghanaians because rather than that, we would have been having more reductions at the pumps," he noted.

He concluded that while the GH¢2 diesel subsidy is a welcome intervention, sustaining such relief will ultimately depend on government's fiscal capacity and broader macroeconomic conditions.

"The taxes and margins that have been suspended are for consumers' respite, and what we have today is good for all Ghanaians," he said.