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27.09.2013 Business & Finance

'ECG Will Collapse Without Tariff Increases'

By Daily Guide
William Hutton-Mensah – ECG BossWilliam Hutton-Mensah – ECG Boss
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The Electricity Company of Ghana (ECG) says much as it sympathizes with the concerns of customers over the recent increase in its tariffs, it would have folded up in no time without the tariff adjustment.

In an interview with CITY & BUSINESS GUIDE recently, Ebenezer Baiden, an Energy Economist, said ECG was heavily-indebted to CENIT Power, a power producer.

He stressed that if tariffs continue to remain the same, customers would have to suffer the consequences.

Mr. Baiden likened ECG's current situation to that of a trader, who goes to the market to purchase a product at GH¢1.00 and comes to the market to sell it at GH¢0.50.

Explaining that inflation had affected the operations of the company, Mr Baiden said: 'They say inflation is coming down but even to what extent. Even if it's 10 percent then it means every year prices are increasing by 10 percent. ECG hasn't been cushioned from tariff increases since 2011 December when it was adjusted. How do we cover these costs to make sure that we provide services to our customers? So it's a situation whereby ECG is struggling to make sure that it keeps the power on as we travel on day and night. Now without this tariff adjustment, what we are being told is that we should just tell Cenit Power that we do not have money to pay.'

He said from August last year, when gas stopped flowing to Ghana, ECG had to shift from generating power from gas to light crude oil (LCO). 'Comparatively, the two fuels when you change over is about twice the cost if you use LCO. Who has to pay for this cost? In fact people have spoken about operational losses and all that. But if your cost of production is increasing by even cutting down operational costs, how much will you pay for it? 'ECG has struggled to reduce losses and over the past one and a half years, we have managed to reduce losses by five percent.'

According to him, 'Gains made from all those could not pay for one power producer, let's say Cenit Energy. So we are piling up debt. We want our customers to know this.'

Future expansion
Year-on-year, he said ECG has seen an increase in demand over 10 percent even in the wake of load-shedding or crisis.

'If even we don't have any crisis at hand, the power consumption will grow by 24 percent within the year. And ECG must make provision for this growth. We need to expand the sub-transmission network and the distribution lines. We need to make sure that at least we have the various alternative sources where we are able to supply the customer with the services they require.'

Investment backlog
He indicated that the company has a backlog of investments.

'There are some stations that have to be built like the third bulk supply plant in Accra. It was supposed to have been commissioned in 2000. It was commissioned last year, hence the backlog.'

'We will require $200 million capital injection over the next five years year-on-year to expand. Every year we connect between 250,000 and 300,000 new customers. How are we strengthening the backbone of the grid to accommodate the new extension?

Rural electrification improved from 65 percent to 72 percent last year. This means that we are electrifying more communities. How do we solve low voltage problems too? We need to do all these things and if customers will continue to cry wolf over the increment, we will simply have to fold up.'

He therefore appealed to all customers to bear with the company in order to ensure quality of service and high expansion drive.

 By Samuel Boadi

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