The Africa Centre for Energy Policy (ACEP) says that the government’s decision to subsidize electricity for Ghanaians would only deepen the woes of the Electricity Company of Ghana (ECG).
The president, Nana Akufo-Addo in April 2020 provided citizens with subsidized electricity and free water for three months, ie. May to July 2020. The move was to alleviate the impact COVID-19 had on the populace.
However, speaking in parliament yesterday, Thursday, July 23, 2020, the Minister of Finance Hon. Ken Ofori Atta announced the government’s intention to extend the program.
Addressing the house yesterday, he said that “It takes a caring government of the people, and with that, I mean, a Government of all the people, to offer cost-free water to all across the country: representing all domestic and commercial customers in Ghana for three months.”
“It takes a caring government to be for the people and for business, large and small, to choose to subsidize electricity consumption by 50 per cent to 4,086,286 households and 686,522 businesses at a cost of ¢1.02 billion in three months. And we will extend the coverage for lifeline customers for another three months”.
ACEP, however, holds a different view as they said that the government’s move is not the best.
Speaking in a media engagement, Executive Director of ACEP, Mr Ben Boakye holds that the ECG is already burdened and does not make enough revenue, hence the move would increase its debt.
“This is not a pragmatic approach to the challenges that we have currently. If you look at how burdened ECG is currently, they are not able to generate enough revenue currently. The inefficiency still exists so this intervention is rather going to deepen the woes of ECG.
“Government has committed to power generation, fuel supply and that comes at a cost so because ECG is unable to raise enough revenue from the power that they sell to consumers government has to intermittently come to finance part of their commitment.
“Some of the IPPs that have been signed up and the excess capacity we have been talking about and the inefficiency that have to be offset, the government have been coming in to pay because as the primary guarantor of the sector.
“So, what that is doing is that when they pay for the inefficiency that they have failed to really address over the years then they go to ECG and say let us nip that off and put that into the books so they continue to make ECG inefficient and continue to infiltrate the decision making of ECG and they don’t want to make the liability that results from that.
“So the liabilities are still in the books of government currently, they offset it at ECG and it becomes a debt,” he said.
The move has however been welcomed by Ghanaians as they say that government’s decision would reduce the impact of the coronavirus.
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