Greater Accra regional chair for the Association of Ghana Industries (AGI), Tsonam Akpeloo, has expressed worry over the review in utility tariffs imposed by the Public Utility Regulatory Commission (PURC).
According to him, the vast increment will negatively affect industries which predominantly rely on water and electricity. He revealed that the dependence of these businesses on utility may likely force them out of business.
Mr Akpeloo stated that owing to this, the AGI has been engaging the Commission which has so far proven fruitful.
“… We are saying that this clearly will make rallying industries in Ghana extremely difficult. So, in light of this, in as much as we are not against review of tariffs, we are just saying that the rates are too high and what we mean by review is you can’t come and in six months go over 50%. Generally, a review of that nature should be single digits.”
Tsonam Akpeloo
Mr Akpeloo indicated that in a meeting with the Commission today, January 24, 2023, the PURC empathized with the plight of businesses and assured AGI that it will thoroughly look into the issues it has raised. With this, he explained that the AGI for that matter is looking forward to a review that will favor industries.
“The truth is that we together with the Commission have agreed that we are okay with a quarterly review of tariffs. So, it’s not a problem at all for them to review tariffs quarterly but our concern is the rate of increase because if you look at electricity for example, within the past six months, it’s gone up over 56% and that is threatening the very survival of our industries. Look at water; water for our beverage side for example has gone up by over 48% in the past six months.”
Tsonam Akpeloo
Elaborating on the impact of the review in tariffs on businesses, Mr Akpeloo revealed that utility cost constitutes a major component of the entire production process for most businesses. He explained that for a market which has a lot of cheap imported products, locally manufactured goods have to compete with some of these products.
Most often than not, he indicated that indigenous businesses are unable to compete because the rate at which they have to increase their prices to be able to survive are invariably high.
“Power for example constitute about 30% of the entire production cost. So, if you’re increasing power within six months by 50%, it affects the very foundation of the survival of the business. So, what happens overtime is that most of our companies are unable to compete in the market.”
Tsonam Akpeloo
Impact of utility tariffs increment on businesses
The AGI’s Greater Accra regional Chair highlighted that if industries are to survive, then utility tariffs must be managed so that they do not affect the overall cost of production. Citing the beverage industry which relies primarily on water to produce drinks, he noted that cost is a major concern when it comes to production.
“… If you increase water by 48% within six months, that affects the overall cost of the beverage firm. This [is the reason why] we are having all the beverage products being imported, they are unable to compete. So, as a result, some of the folks are closing down or cutting down on operation [and] some of the workers are being laid off because they are unable to compete… So, an increment in utility, AGI is not against it, we are just saying that it has to be managed in a manner that is helpful for us as industries.”
Tsonam Akpeloo
Despite the gloomy impact of tariffs increment on businesses, Mr Akpeloo expressed optimism over AGI’s engagement with PURC. He stated that the AGI has had very “favorable conversations” with the Commission and hopes for a better rate as utility tariffs.
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