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21.05.2007 General News

Time To Charge Commercial Tariffs

A FORUM of past and present executives of the Association of Ghana Industries (AGI) has called on the government to, as a matter of urgency, adjust utility tariffs to commercial levels to encourage investment and to safeguard the systems.

The private sector body said any delays or refusals by the government to charge commercial tariffs, particularly for electricity, would discourage investment by both the power producers and distributors on one hand and also any private investment in the sector.

The forum has become an annual affair during which the present executive council of the AGI opens up its doors to invite opinions, ideas and advice from past members in order to shape the association and maintain a steady course.

Mr Andrew Quayson said instead of charging between 10 and 12 cents for residential customers, the current tariff was about six cents for a unit of power, adding that the Volta River Authority (VRA) and the Electricity Company of Ghana (ECG) spent more than that to produce stepped down power to residential consumers.

He said such a subsidy meant that the government was subsidising a great chunk of the rich who could afford to pay commercial rates.

His conclusion was informed by the fact that only 50 per cent of Ghanaians, mainly in the urban areas, have access to electricity, while the remaining 50 per cent, mainly rural dwellers, have no access and their candles and kerosene were not subsidised.

He said the country's hydro-electric power source, Akosombo Dam, should have been operating together with an appreciable level of thermal power but that had not materialised over the years because of lack of funds for such huge initial capital outlays.

Mr Quayson explained that no bank in the country was willing to lend to the two companies because they were loss makers.

“Our problem is that we have not as a country invested heavily in the power sector and no investor will invest in that sector because of how it is presently structured; it has to be rationalised,” he said.

Mr Quayson, who has been associated with energy for a long time, drew parallels with the petroleum and telecommunications sectors, where he said, there was obvious efficiency and competition, increased access and downward pricing, due to the liberalisation.

“We should solve this problem once and for all else the problem with petroleum that nearly collapsed the Tema Oil Refinery and the Ghana Commercial Bank will happen,” he cautioned.

Mr Quayson, however, commended the industrial sector for considerably cutting down on their energy consumption during the country's energy crises, saying residential customers, who rather did not pay commercial tariffs, were still wasting power, primarily because it was cheap.

Mr Andrew Lawson, for his part, said the country's current power shortfall was about 30 per cent, just the level that was wasted through lack of conservation and obsolete equipment.

He called on Ghanaians to put energy saving measures in place to forestall the shortfall.

Mr Kludjeson said the government should institute policies to guide energy consumption, such that property owners would be mandated to install solar water heaters and other renewable power sources in order to save the grid.

He said in these times of load shedding many people within the city were ready to use expensive alternative sources, especially diesel generators, a positive signal that the public was ready to embrace any commercial rates.

Mr Oteng-Gyasi informed the past executive of how strong and more relevant the association had become in national issues, adding that the AGI would continue to contribute its quota to shape policy and influence the growth and development of the private sector and the economy as a whole.

He urged the government to withdraw all subsidies in the utilities sector and rather rationalise them, saying the rationalisation and liberalisation of pricing in the telecom industry had helped in making that industry competitive.

Story By Samuel Doe Ablordeppey