Consumers of power have been offered a temporary relief by government via a new subsidy to cushion them against the debilitating impact of costly power tariffs, the Electricity Company of Ghana (ECG) has announced.
The introduction of the subsidies is expected to offer respite not only to “life line” customers seen as the poor and vulnerable, but also to all customers of the country’s main electricity distributor whether residential or commercial.
The announcement made by the ECG at a press conference in Accra on Monday means that consumers of power will now pay a rate of 34 pesewas per unit for the first 50 units of power consumed instead of the 67 pesewas per unit previously charged.
Before yesterday’s announcement, the only subsidy in the electricity tariff applied to only the lifeline range (0-50 units) and when a consumer breaches that range he/she is charged retrospectively with the subsidy-free tariff for all units consumed.
Speaking at the press conference yesterday, Ebenezer Baiden, General Manager, Regulatory and Governmental Affairs of ECG explained that the utility provider’s latest move is not a reduction in the power tariffs rather to provide some relief to the consumers for the next six months.
The new subsidy which is expected to cost some GH¢300 million comes at a time government is struggling to settle its indebtedness to the ECG following years of unpaid subsidies as well as usage of power by its agencies and ministries.
Deputy Minister of Power, John Jinapor is quoted in the media yesterday as saying that government has released GH¢200 million to settle part of its debts owed the ECG. While the ECG could not provide a figure regarding government’s current indebtedness at its meeting yesterday, the amount is speculated to be in the region of GH¢1billion.
But Mr. Baiden expressed confidence that the latest subsidy will not face similar challenges when it comes to repayment by government.
“We are talking about a relief from government to the people of Ghana and ECG is supposed to implement that. We clearly know how much the relief is; about GH¢300 million. This will be paid for through a sector restructuring arrangement which will come through a refinancing type of infrastructure for the power sector,” he said.
The announcement of the subsidy followed a promise made by President John Mahama who is seeking a second-term in office when the country goes to the polls later this year.
Last year’s increment in utility prices of about 60 percent for electricity and 75 percent on the average for water, was met with widespread public displeasure mostly arguing that the increment was too steep.
“The government having met all stakeholders of the power sector has provided some reliefs by way of subsidies to all ECG customers. The reliefs have been applied to extend the lifeline rate to all residential customers instead of the previous application to only customers with consumption between (0-50 units) within a month,” officials of ECG said.
There are concerns that the Mahama-led administration which is running a tight fiscal schedule owing to its programme with the International Monetary Fund (IMF) will buckle under voters’ pressure and thus run the risk of overshooting its deficit which it estimates to reach 5.3 percent of GDP in 2016.
The reintroduction of the power subsidy in the run-up to the elections is set to test the government’s resolve to contain its expenditure in an election year
Source: thebftonline