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12.06.2007 General News

AGI issues ultimatum to government


The Association of Ghana Industries (AGI) has warned it will be left with no option than to demand for subsidies on fuel if the current load-shedding exercise is not over by September.

Speaking at an AGI members Luncheon, the President of AGI Mr. Tony Oteng-Gyasi said: "Policy makers should strive and manage the situation in the way that the adverse impact is minimized on business and industry."

The AGI petitioned government three months ago to grant its members subsidies on fuel, and allow industries to provide for depreciation on fixed assets for one year instead of the normal three to four years, to cushion industry in the unchanging electricity crisis.

Government did not grant the petition on the assurance that the crisis will be over by September.

Industry is spending on average US$62 million monthly on fuel.

This, together with the inconvenience from the load-shedding, industry has complained of as increasing cost of production and hence the tendency for domestic prices of goods and services to go up.

The Governor of the Bank of Ghana, Dr. Paul Acquah, conceded that the load-shedding programme played a role in shaping expectations, and has resulted in a dip in business confidence at the end of the first quarter.

He noted that the high pace of economic expansion has come with an increased demand for energy, which is estimated to be growing around 7 percent annually.

"Industry thrives on energy and when supply is rationed below demand, overall industry output may be affected," he said.

He added that output losses can be reduced when industry is able to introduce mechanisms and measures to cut down losses, such as drawing on contingency or stand by sources of supply outside the main grid.

“In complement industry can also push the envelop of operational efficiency to bolster output and profitability," he underscored.

More importantly, he said the energy situation should be seen as having a silver lining highlighting the need to focus on long term energy policy to underpin the drive for a middle income status.

"It should also be a call for businesses to adapt their operations to make them energy efficient in a medium term planning horizon," he added.

Source: B&FT