AGI calls for review of domestic tariffs in favour of industries
The Association of Ghana Industries (AGI) is calling for the review of the subsidies on domestic electricity tariffs in favour of industries to make the industrial sector more competitive.
Advertisement
“The current structure where industry subsidises residential consumers erodes competitiveness of industry and, therefore, not acceptable,” the President of the association, Mr James Asare-Adjei, said at the 55th annual general meeting (AGM) of the AGI in Accra.
Reviewing a year in which Ghanaian industries had to struggle through a crippling energy crisis, a depreciating cedi against major trading currencies and high interest rates, he said “our businesses have suffered severely as a result and Ghana has been the loser.”
“Industrial output has been affected, and worse of all, investor confidence has been negatively affected,” he added.
Implement SNEP
He, therefore, made a passionate appeal for a permanent solution through the implementation of Ghana’s Strategic National Energy Plan (SNEP) –a policy document that comprehensively looks at the country’s available energy sources and resources and how to tap them economically and timely to ensure a secured and adequate energy supply for sustainable economic growth now and into the future.
The Public Utilities Regulatory Commission (PURC) is currently engaging stakeholders to increase utility tariffs — an exercise highly influenced by factors including rate of inflation, exchange rate and power generation mix.
However, Mr Asare-Adjei observed that the factors that triggered tariff adjustments largely stemmed from the country’s weak macro-economic fundamentals and inefficiencies of the utilities and, therefore, it was unfair to offload the consequences of such inefficiencies onto industries.
While describing the country’s macroeconomic environment in the last two years as harsh, he said he was hopeful that the intervention of the International Monetary Fund (IMF) in the country’s economic programme, which the association openly supported, would bring about the needed fiscal discipline and help boost confidence in the economy.
“We urge our present and all future governments to manage our economy in a way that will not require continuous dependence on international institutions” he said of Ghana’s current $940 million IMF intervention expected to contribute to turning the economy around.
EPA opportunities
With the country signing the Economic Partnership Agreement (EPA) with the European Union and AGI holding several dialogues with the stakeholders on the benefits and challenges, the AGI President rallied the members of the association to identify the opportunities and work assiduously to harness them.
The opportunities notwithstanding, he said presently, it was uncertain when effective implementation of the Common External Tariffs (CET) would begin, but he said he was hopeful that Ghana’s policy makers would apply the safeguard measures under the CET to the benefit of local industries.
In a speech that also touched on various projects of the AGI in the year under review, he announced that the association had gone far with plans to establish an industrial development bank to support industries with medium to long-term finance.
Government borrowing
The Minister of Finance, Mr Seth Terkper, who was the guest speaker at the event, made a strong case for government borrowing, insisting that such loans would not become public debt as there was a paradigm shift where such funds were used to finance commercial projects that would pay back the loans.
“Commercial projects should pay for the loans. It should not be a burden on the taxpayer. Such projects become enterprises and should be able to pay for the investments,” he said.
While acknowledging that it was important to ensure industries had cheap and reliable power, the Finance Minister said it was also important not to overburden those in the lifeline bracket whose energy consumption were not high.
Mr Terkper stated that Ghana would continue to be part of the IMF, which, in critical times, had come to the rescue of even developed economies, including Spain, Portugal and Greece.
While emphasising the need for an Eximbank in Ghana, he urged business associations to be more export-oriented to increase the country’s foreign exchange kitty to support imports.