Chief Executive Officer of the Association of Ghana Industries (AGI), Seth Twum Akwaboah, has revealed that the 148% electricity tariff adjustment proposed by the Electricity Company of Ghana is high for industries in the country.

According to Mr Akwaboah, although the 148% is just a proposal from the ECG, it is vital to know what is informing the price adjustment proposed by the national distributor. He noted that the margin of increase will have an unpalatable impact on businesses as industries are going through serious challenges, particularly with regard to cost of production and cost of freight of raw materials into the country.

The AGI CEO explained that despite the fact that production cost is going up, prices cannot increase proportionately because industries do not want to lose its market share, “especially when you have imports also competing with you in your own market”.

“We are aware of a number of things. We know the factors that go to determine the tariff level, the exchange rates, the international oil prices, the energy mix; those are the factors that normally are taken into account for a review. So, we expect that if changes are happening in these areas, then possibly there may be a review. However, we are also mindful of the fact that industry has been complaining seriously about the issue of cross subsidy, where industries are being made to subsidize residential users of tariffs of electricity.

“On the whole, I think that the 148% is too high for industries. I don’t think that can be possible for industries but we will look into the numbers and come to a certain conclusion.”
Seth Twum Akwaboah

Impact of electricity adjustments on industries

The AGI, Mr Akwaboah intimated, is mindful of the fact that ECG must be supported to provide efficient and reliable service in the form of electricity to industries. He expressed that because they are unable to“recover their electricity generated to provide the kind of services” industries need, occasional adjustments are sometimes unavoidable. That notwithstanding, he highlighted that the extent of adjustment always have to be looked at, taking into account the fact that businesses want to know their actual cost of service.

“If your cost of serving me electricity costs me X that is what I should pay for. I cannot pay the X plus some other things which goes to subsidize residential users and other users which are not relevant to industries. When you do that, you make industries uncompetitive. So, coming from the background of cross subsidy, I believe that if you remove the cross subsidies and you are even adjusting, you come to a point where you notice that the actual increment to industries will not be that high…”
Seth Twum Akwaboah

Commenting on the Public Utilities Regulatory Commission’s (PURC) engagement expected to hold on May 11,2022, Mr Akwaboah revealed that the Commission has extended an invitation to the Association to discuss matters pertaining to the adjustment proposed. He expressed optimism over the outcome of the engagements indicating that his outfit constantly engages the Commission especially when it comes to major tariff reviews.

“Already, we are one of the high tariff countries when it comes to electricity. So, if you want to make your industries competitive, then you are mindful of the fact that you need to really protect industries by making the cost competitive. So, I believe in our meeting with them, all these factors will be taken into account and we’ll come to a reasonable conclusion for all of us.”
Seth Twum Akwaboah