Business News of Friday, 20 January 2017
The Africa Centre for Economic Policy has called on government to set in motion accelerated programmes to settle the debt of the utilities companies whilst, setting up healthy institutions to manage the delivery of power.
The Centre urged government to develop and implement an energy sector financial restructuring and recovery plan with liquidity management mechanisms for the utility companies to resolve the challenges in the energy sector.
Speaking in an interview with the Ghana News Agency, Mr Benjamin Boakye, ACEP Deputy Executive Director said government should let the public know how much has accrued from the energy sector levy which was instituted by the past government and its utilization so far.
“Government should, in that process, let the public know for how long they have to pay the levy so that the relief from payment of the levy can be anticipated and tracked,” he added.
Mr Boakye urged government to fulfil its manifesto promise to conduct a technical audit of power sector infrastructure develop and implement a ten year master plan, saying the audit was relevant to ascertain the efficiency and robustness of the power sector infrastructure to serve the need for a stable power supply.
The Centre reminded government to fulfil its promise to reduce taxes on electricity tariffs to provide immediate relief to households and industry, stressing that the 17.5 per cent VAT on industrial consumers should as a matter of urgency be removed to improve the cash flow of businesses and their productivity.
Mr Boakye advised government to renegotiate expensive power agreement, cancel non-performing ones and adopt competitive procurement processes especially with the terms of the AMERI, Karpower and AKSA contracts.
He was of the view that the Centre was convinced that value for money was not achieved in those contracts and appealed to government to fulfil its promise to institute competitive bidding processes for future generation addition to ensure value for money and abolish the current practice of single sourcing all power contracts.
Mr Boakye said government, in fulfillment of its promise to increase the proportion of renewable energy in the national energy mix, should clarify the incentives, simplify processes and encourage investment in these technologies to reduce reliance on importation of fuel for power generation.
He said the country’s energy sector required efficient leadership that could carefully align the energy sector decisions with the rest of the economy.
Dr Ishmeal Ackah, Policy Adviser, ACEP said the power sector challenges were far from over regardless of the relative stability in supply to consumers, adding that the additional generation capacity to the grid, has helped to provide power to replace unavailable power from T3 thermal plant, Akosombo and Kpong Hydro Plants, Asogli and others.
He however said the other challenges such as financial distress of the utility companies, fuel supply security, high tariff, and suppressed demand, did not only threaten the stability of power supply, but explosion of the economy as a whole.
Dr Ackah noted that beyond the fuel supply constraints linked to financial distress of the sector, indigenous supply of gas would also suffer when the FPSO Kwame Nkrumah goes out for maintenance which would affect supply of gas to power plants in the Aboadzi enclave.
He said if the country was unable to secure gas supply, power outages would return and that there was the need to ensure availability of Light Crude Oil for the dual fuel plants in the hope that gas from TEN project would be on schedule to keep AMERI running.
He noted that electricity tariff in the country was among the highest in the world and the highest in the sub-region, which affected the competitiveness of Ghanaian businesses and consumers in general.
“This was occasioned by the imposition of taxes and levies, and the procurement of expensive generation plants. The effect has been the stagnation of demand and resultant poor industrial growth, which calls for critical examination of the factors affecting tariffs; taxes and expensive generation options, so that some relief can be passed on to consumers,” he noted.