Saturday, 17 March 2018

Businesses positive about electricity tariffs reduction

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Adnan Adams Mohammed

Business owners in the country have expressed joy and optimism over the reduction in electricity tariffs for both residential and commercial establishments announced recently by government through the Public Utilities Regulatory Commission (PURC).
The Private Enterprises Federation (PEF), Association of Ghana Industries (AGI) and Industry and Commercial workers Union (ICU) have qall said, it will bring a huge relief to businesses and the general public.

PEF, in a statement said, its members are very elated and it would like to express its profound appreciation to the government and the PURC for the reduction of electricity tariffs.

“The march towards advocating for the creation of conducive business environment to promote a profitable, competitive and sustainable private sector in Ghana has been given a huge boost by the government and we believe this will continue,” the statement, signed by PEF’s CEO, Nana Osei Bonsu, added.

Per the new electricity tariff regime recently announced by government, residential consumers will enjoy a 17.5 percent reduction and non-residential/ businesses 30 percent. Players in the mining sector will also experience a 10 percent reduction, with 25 percent savings going for Special Load Tariff Customers (LV, MV &HV).

However, the reduction in tariffs, which was supposed to be effective from March 15, 2018 according PURC, will now be effective from April 1.

This is because the Electricity Company of Ghana (ECG) explains that the implementation cannot reflect on the bills of consumers due to the monthly cycle billing system it uses.

The Managing Director of ECG, Ingineer Samuel Boakye-Appiah addressing a press conference, explained that “the monthly billing cycle of the prepayment metering system does not technically allow ECG to implement the review in the middle of the month”.

“Consequently, prepaid customers of ECG should note that the programming of the billing system will refund the reduction from the implementation date of the 15th to 31st March 2018 when they deposit cash or purchase electricity from 1st April 2018 onwards,” he added.

Ingineer Boakye-Appiah pointed out that, the prepayment system will detect aggregate purchase for consumers on the month of March, and then compute the reduction due them, from the effective date of 15th March to 31st March.

“This will be refunded to you on your next visit to vending point”.

He stated that the average percentage reduction , which is 15.5 percent for residential, 30 percent for non-residential, 25 percent for SLT and 10 percent for the mines, effective 15th March 2018 is only on energy consumption.

“Therefore the addition of statutory levies and other fixed charges will reduce the average percentage relief announced by the PURC”, he warned.

Ingineer Boakye-Appiah disclosed that ECG has catalogued all unit consumption and expected cost in a “reckoner” which clearly explains how the tariff is calculated and billed regardless of the type of metering.

“This will be displayed at all district offices and revenue centres nationwide to guide consumers on their electricity purchase”.

Reacting to a question, however, Ingineer Boakye-Appiah gave the strongest indication that the power distributing company will not hesitate to go back to the PURC if the implementation of the tariff reduction leads to losses.

But, PEF believes, among other things, the reduction will impact positively on operations of businesses by helping reduce operating and production costs, and by extension contribute to reducing the cost of doing business in the country.

The federation said it will also help improve the competitiveness of Micro, Small and Medium Enterprises (MSMEs) in the country.

“This bold action, coming on the back of progressive reduction in the rate of inflation, collectively constitute strategic efforts in the right direction that will inure to the benefit of Ghanaians by easing the cost of living and attendant improvement in livelihoods.

“PEF and its member associations and chambers encourage the government to make all efforts to bring down the cost of borrowing (interest rate) and also build a pool of long-term funding to support private sector investments,” it added.

Also, a statement issued recently and signed by Dr Yaw Adu Gyamfi, AGI President commended government and said, it is a welcome gesture, particularly coming on the heels of the recent stakeholder consultations.

Since the last tariff review in December 2015, high cost of electricity has often emerged as the number one difficulty facing businesses, according to the AGI business barometer reports.

Consultations on electricity tariff and calls on government to re-consider the current tariff levels have since been a major advocacy agenda for AGI and other groups.

“AGI is therefore happy that this concern has received government’s attention, taking cognizance of some of the factors we believe impact on energy pricing.

“While awaiting details of the gazetted tariffs in the coming days, AGI is optimistic the reductions will open up new prospects for businesses and inure to our competitiveness as a country. We look forward to the new tariffs taking effect from 15th March, 2018 with the right billing systems put in place to ensure smooth implementation.”

The AGI additionally acknowledged the bold step taken by government and the PURC towards the electricity tariff reductions and noted: “we hope to continue the dialogue to ensure utility rates for industry remain competitive.”


Similarly, mining companies are expecting a ten percent reduction in electricity tariffs.

Though the sector believes plans may have been distorted a little, the Director of Communications at the Chamber of Mines, Ahmed Naatogmah says they will still comply with the directive.

“Definitely you were expecting something to start so you would have planned for it but I wouldn’t say we are disappointed. Unless of course at the end of the process the reimbursement is still not done, then we can have some concerns to raise,” he argued.

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