Graphic Online

Graphic Online 

We support govt’s pledge to reduce tariffs

Author: Daily Graphic
Minister of Energy, Mr Boakye Agyarko
Minister of Energy, Mr Boakye Agyarko

The Minister of Energy, Mr Boakye Agyarko, has hinted of steps by the government to reduce electricity tariffs in 2018 as promised by the NPP government during the run-up to the 2016 election.

At a news conference in Accra last Wednesday, the minister said that decision would be included in the 2018 Budget to be read in November.

Even before the minister’s announcement of the tariff reduction, the Ghana Employers Association (GEA) had signalled that it would push for a substantial reduction in the electricity tariffs in the 2018 Budget.

The association has indicated that the cost of power to businesses in Ghana is one of the highest, compared to other West African countries.

According to the second quarter business barometer report of the Association of Ghana Industries (AGI), businesses are unhappy about the high cost of electricity, which, they say, is a challenge to businesses, in spite of the relative stability in power supply.

The AGI maintains that the current cost of power to industry at 19 cents per kilowatt-hour is a major challenge to its members.

The Daily Graphic supports the call for a review of the electricity tariffs because cheap power will boost economic growth as manufacturing is a critical sub-sector of industry.

We believe that if the government is to chart a competitive path for industry, then it must reduce the cost of power to industry.

 When industries continue to experience high operational costs resulting from astronomical electricity tariffs, there is no way any meaningful growth or competition can be achieved.

We, therefore, urge the government to speed up whatever reforms it is pursuing in the energy sector to ensure that the reductions in electricity tariffs are indeed implemented.

Current electricity demand for the country stands at about 2,225MW. This is growing by 10 per cent per annum and is expected to hit 7,000MW by 2030.

We are aware that constraints for fuel sources of power generation — crude oil, gas—and water for hydro power generation have necessitated the need for exploring cost-effective, reliable, clean energy and power sources.

To achieve a proper pricing mix for the energy sector, we suggest that the government pay more attention to the expansion of the distribution infrastructure with a full cost action plan with private sector participation under a Private Public Partnership (PPP) scheme.

The ministry should also have an enforceable policy mandate in place for the introduction of energy-efficiency programmes, especially at the ministries, departments and agencies (MDAs), using energy audits and remote monitoring systems.

 The Daily Graphic, therefore, calls for an overall review of the regulatory framework to ensure competition which would increase efficiency, ensure price guarantees by curbing abuse of market power due to collusive and arbitrary pricing by the utilities which will ultimately culminate in better consumer welfare.