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Electricity Tariff Increment Detrimental To Industries – AGI Cautions

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The Association of Ghana Industries (AGI) has cautioned, reviewing electricity tariffs of the country upwards would be harmful to the operations and survival of businesses.

Arguing that, Ghana’s tariffs are among the highest in West Africa, the Association has rather called for reliable and efficient service delivery in the lead to the take over of ECG by Meralco Consortium.

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In a communique by AGI it has explained that, “While expecting reliability and efficiency in service delivery and competitive tariffs from the new company to take over operations of the distribution network in southern Ghana, we do recognise the need for a tariff regime that is structured in a manner so the utility service providers can recover cost in order to remain viable.”

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The communique which was issued following a recent meeting of the Association’s National Council in Accra and signed by its president, Dr Yaw Adu Gyamfi, has stressed, a competitive tariff regime will rather spur existing industries to become competitive in the sub-region while attracting new ones.

“The AGI expects that ongoing discussions on review of the electricity tariff should take the competitiveness of Ghanaian industry into account. The Council is of the strongest view that industry should not be made to subsidise residential consumers of electricity as is currently prevailing.”

While new company is yet to take over from the Electricity Company of Ghana, it is uncertain if Meralco Consortium will adjust tariffs upwards, as concerns has been raised over high debt of the electricity company.

In November last year, the Trades Union Congress (TUC) called for tariff reduction, with the expectation of reduction in price of fuel and natural gas. TUC demanded for 15% reduction in electricity tariff and an additional 12% cut in water bills a day before the finance minister presented the 2019 budget. But the Public Utility Regulatory Commission is yet to come up with approved tariffs for this year, as take over of ECG delays.

 In August 2014, the government of Ghana signed the Power Compact II agreement with the Millennium Challenge Account (MCC) under the Millennium Development Authority (MiDA), an independent United States government agency, which is expected to allow the company to be managed privately for a period of 20 years.

The Government of Ghana, Power Distribution Services of Ghana Limited and ECG have signed transaction agreements which have been ratified by Parliament. The status of ECG as an electricity distribution company would, therefore, change to asset owner and a bulk energy trader, sometime, this year.

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