The Association of Ghana Industry (AGI) has begun a fresh push for government to consider their persistent call for industry and corporates to stop subsidizing electricity for residential users.
According to the AGI, this may be the umpteenth time they are making this call; but with commencement of the Africa Continental Free Trade Area (AfCFTA) the call must now be given serious consideration to save industries from collapse and help protect jobs.
Speaking in an interview with the B&FT, the Chief Executive Officer of AGI, Seth Twum Akwaboa said: “It is most critical, and the time has to be now or never; for the reason that we have a continental free trade and it thrives on competition. If you want your industry to be competitive, then help to reduce cost – or else others will shift their goods into your market”.
The AGI has thus impressed on the Public Utilities Regulatory Commission (PURC) to factor-in their concerns during the upcoming major utility tariff review to help ensure that industry is kept in a survival mode – as many are depressed with the cost of electricity, leading to high pricing of goods and services.
“There is going to be a major tariff review, and this must be taken into account. We are all residential users of power, but at the end of the day I must have my job to keep me going and get the money to pay my bills. If this is not checked and industry is power-burdened and folds up, it will get to a point where even if you reduce the cost to residential users by 90 percent, many people are going to be out of work and cannot pay. That is what we are trying to avoid with this strong advocacy,” he said.
The AGI said for many years it has made this call strongly, with verifiable data, but government has been deaf to their concerns because it is a difficult decision to make; but in the current dispensation, something must change to give real meaning to the industrialization agenda being pursued.
“We know that this is a big issue because it may end up increasing residential tariff levels, and no government would want to be seen in that light; but I think we should look at the long-term effect of these things on industry and job creation,” Mr. Akaboah said.
He noted that in Ethiopia electricity is sold to industry at less than 5 cents per kilowatt hour (kWh), but in Ghana industry pays 15-17 cents per kilowatt hour (kWh); therefore, if investors want to set up international companies, they will go to a low-cost area and ship the goods into the country, all things being equal.
As of four years ago, data revealed that for domestic consumers the tariff in Ghana was around 19-28 cents per kilowatt hour (kWh); La Cote d’Ivoire was nine cents per kWh; Benin 17 cents per kWh, Togo 16 cents per kWh, and Nigeria was 17 cents per kWh. While the figures have been better over the years for other countries, Ghana has seen a marginal improvement, keeping its rates still high.
“A company in Ghana pays GH¢5million for electricity, you need one meter and one person to go and check; getting residential users to pay GH¢3million is a whole town. The step-down transformers and meters that will be installed and the leakages cannot be matched with those of one factory; how come the industry pays more than residential users? It does not make us competitive,” the AGI boss intimated.
