Electricity tariffs already high, no need for upward review – AGI

Ghana’s electricity tariffs are among the highest in West Africa, the Association of Ghana Industries (AGI) has said – noting that any upward adjustment will be detrimental to the fortunes of industry.

While calling for reliable and efficient service delivery, the AGI noted that the imminent takeover of ECG by Meralco Consortium should not bring about an increase in tariffs. It said any tariff adjustment must take into consideration competitiveness of the industry comparative to the sub-region.

“While expecting reliability and efficiency in service delivery and competitive tariffs from the new company to take over operations of the distribution network in southern Ghana, we do recognise the need for a tariff regime that is structured in a manner so the utility service providers can recover cost in order to remain viable,” the AGI said in a communique.

The communique was issued following a recent meeting of the association’s National Council in Accra. It said ongoing discussions on a possible review of electricity tariffs should, therefore, mirror the plight of industry.

More importantly, it argued that a competitive tariff regime will spur existing industries to become competitive in the sub-region while attracting new ones.

The communique further noted that the current arrangement wherein residential consumers are subsidised by industry is counterproductive because it burdens manufacturers and lessens competitiveness.

“The AGI expects that ongoing discussions on review of the electricity tariff should take the competitiveness of Ghanaian industry into account. The Council is of the strongest view that industry should not be made to subsidise residential consumers of electricity as is currently prevailing,” added the communique signed by AGI’s President, Dr. Yaw Adu Gyamfi.

ECG takeover

In August 2014, the government of Ghana signed the Power Compact II with the Millennium Challenge Account (MCC) (MiDA) – an independent United States government agency – on August 5, 2014. And part of the contract was to allow ECG to be managed privately for a period of 20 years.

Pursuant to this, MiDA awarded the operations, investment and management of ECG to Meralco Consortium in April last year, following the completion of an international competitive procurement process and evaluation of the proposals received for the ECG Concession