High cost of electricity is still a major challenge industries are struggling to deal with despite the reduction in utilities prices announced in the 2017 budget, the current Association of Ghana Industries (AGI) Business Barometer 2017 report has revealed.
High interest rates. access to credit, continuous depreciation of the cedi and unfair competition with foreign companies followed consecutively after the challenges with electricity.
Government in the 2017 budget reduced the Public Lighting Levy from five percent to two percent, and further reduced the National Electrification Scheme Levy from five percent to three percent, hoping it will bring down the cost of electricity.
Industry players have however expressed dissatisfaction saying it is woefully inadequate and only has a minimal effect for consumers.
Speaking to journalists, AGI President, James Asare-Adjei wants government to re-examine the current utility pricing and tax, saying the reduction is not significant enough.
He explained that “the high electricity tariff continues to render industry uncompetitive. Reductions in energy sector levies have not reduced tariff levels significantly and it is critical for the current tariff regime where industry pays more than residential consumers to be reversed. At tariff levels of over 19 cents per kilowatts, it is important to re-examine the current utility pricing and tax, if government is to chart a competitive path for industry”.
AGI has however reiterated its commitment to work with the Energy Ministry and PURC, to find lasting solution to the energy situation.
Asare-Adjei added that “government’s plan to seed 51 percent of the concessionary arrangement for local participation is laudable and AGI believes it will go a long way in resolving the cost of power to industry. We urge government to intensify the dialogue with industry on the 51 percent composition.”
The Association is also unhappy about the non-reflection of the reduction of the policy rates on the market.
According to the AGI, although the policy rates have reduced for the third time in a row, cost of credit and access to medium, to long-term, credit still remain major bottlenecks to businesses.
“Currently, average lending rates are still high and it’s obvious that the declining policy rate has not inured to the benefit of borrowers. Businesses are unable to borrow because of the high cost. Government must make every effort to ensure that the reduction in policy rate translates into lower interest rates,” Asare-Adjei said.
The AGI again wants government to expedite action on easing port clearance procedures under the Single Window System. But it is confident the various initiatives by the Vice President, including the introduction of paperless transactions will yield positive results.
Meanwhile the overall confidence in the economy rose from the 103.8 recorded in the first quarter to 109.2 in the second quarter, 2017.
The Association cited the relative stable exchange rate, the consistent drop of policy rate and inflation figures, as well as government’s initiatives and policies, such as the One District, One Factory and the stimulus package as factors for the improvement.
However, expectations are still very high as members ask government to take steps to make the economy more stable in next quarter of the year.