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30 June 2010 | Business & Finance

Manufacturers Suffer From 298% Tariff Increase

Daily Guide

Unilever Ghana Limited, Printex, Aluworks, Ghana Textile Printing and other manufacturing firms could be forced to suspend their operations due to the astronomical increase in utility tariffs.

Others might be forced to shut down if the Public Utilities Regulatory Commission (PURC) does not review the exorbitant electricity and water tariffs.  

CITY & BUSINESS GUIDE has in its possession a document that suggests that the actual adjustment in electricity tariff that was announced by the PURC for industry was actually 298 percent and not the 89 percent.

The new tariffs took effect from June 1.
Already, the manufacturing and mining firms have expressed worry over the astronomical increment in the electricity tariff, which according to them, would affect their operations severely.

According to them, the textile firms, which employ 3,000 people, would have no option but to shut down if the cost of production escalates beyond their control.

Analysis made by the players in the manufacturing industry indicates that per the recent tariff increase in electricity, the energy charge for special load tariff-medium voltage (SLT-MV), which represents an increase of nearly 300 percent, was a death blow.  

According to them, the energy charge was increased from GH¢9.05 to GH¢27 for special load tariff-medium voltage (SLT-MV), representing an increment of almost 300 percent.

The manufacturers noted that they would have to cut their output or sack some workers since they could not cope with the high cost of operations.

On water, the manufacturers disclosed that industrial or commercial rate was increased to GHp180, representing 63.64 percent, while the rate for public institutions or government departments was increased to GHp154, representing a rise of 40 percent.

Already, some of these firms, especially Unilever, Nestle are battling with unfair trade competition, illegal trade practices and counterfeiting on the market

And industry watchers say the astronomical increase in the electricity tariff would provide a major headache.

The local textile firms in the country have faced various challenges.

From a workforce of 25,000 in 1975 that was employed by about 10 firms, the number of workers currently in the textile industry is 3,000, with only three firms.

Ghana Textile Printing has a workforce of about 500, while Printex and ATL have about 300 and 1,400 staff members respectively.

Volta Star Textiles Limited, formerly Juapong Textile Company (JTL) has already shut down its business because it is indebted to the Electricity Company of Ghana to the tune of GH¢491, 668.4 from January 2008 and May 2010.

Abraham Koomson, Secretary General of the Ghana Federation of Labour, told this paper last Friday that the sacking of workers was imminent if the new tariffs are not reviewed since the companies could not cope with the high cost of production.

He added that the manufacturers would pass on the additional cost to consumers, including the so-called low-class population.

“So the exemption policy being branded by the PURC was neither here nor there,” he added.

The Association of Ghana Industries (AGI) has already expressed dissatisfaction with the new tariffs, saying it was unacceptable.

It warned that many people could lose their jobs in the manufacturing sector if government fails to review the new tariffs.

By Charles Nixon Yeboah

quot-img-1History is sometimes the best evidence.

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