If we grew by negative 8% last year, imagine this year – AGI

Business News of Monday, 2 February 2015

Source: myjoyonline.com

Seth Twum Akwaboah AGI New

The Association of Ghana Industries has painted a grim picture of the cost of the erratic power supply to the manufacturing sector of the local economy.

President of the Association, Seth Twum-Akwaboah says, even though the power situation was better last year, the manufacturing sector of the economy grew by negative 8% percent.

Given the deepened crisis of the power supply situation and unreliability of the power rationing schedule this year, the situation looks even bleaker, he said.

Touching on the cost of the power crisis christened locally as ‘dumsor, dumsor, Mr. Twum-Akwaboah said “How can you bring workers…they can’t produce, and then you pay them?” He was speaking to Joy FM Super Morning Show Monday.

A slump in gold prices last year led to a shedding of about 8,000 workers in the mining sector. But the woes of mining industry resulting from falling prices of gold last year has been made worse by erratic power supply.

AGI, Ghana Chamber of Mines and the Electricity Company of Ghana (ECG) struck a deal last December to grant industries six days of continued power supply and two days of power outage, including Sundays, under a load-shedding schedule.

Under the new schedule, residential areas will have 24 hours of power supply and 12 hours of power outage, while the Chamber of Mines and steel industries have agreed to reduce the power they use by 25 per cent.

Heavy industries need power to heat their machines long enough to be able to melt ore and precious minerals. Erratic power supply means workers sometimes turn up at work with nothing to do while their smelters are not appropriately heated.

“If the situation continues we will have a crisis on our hands”, Twum-Akwaboah fears. He said job cuts will lead to decreased volume of output and affect market shares.

Ultimately, low profit margins will also affect government revenue accruing from the sector.

Ghanaians have been enduring power rationing for upwards of three year now.

Various explanations have been given for the situation, chief amongst them being the cuts in gas supplies from Nigeria. Many of the power generating plants in the country rely on gas to generate electricity, but the cut in supplies from Nigeria they had to rely on a more expensive alternative – crude oil.

It has been argued that buying crude to power the plants will place the power generated beyond the reach of many.

But some civil society organisations maintain that government is not being truthful about the scale of the problem and the cause.

The Africa Centre for Energy Policy (ACEP), has insisted that managers of the power situation could do better.