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Employers caution against utility tariff

BY: Suleiman Mustapha
Employers caution against utility tariff
Mr Alex Frimpong, CEO, Ghana Employers Association

The Ghana Employers Association (GEA) has cautioned against utility tariff increase, saying reviewing tariffs upward will prolong the recovery period of businesses from the effects of the COVID-19 and render them uncompetitive.

The Chief Executive Officer of the GEA, Mr Alex Frimpong, said in an interview with the Daily Graphic that the outbreak of the COVID-19 pandemic had taken a heavy toll on businesses, which he said required more work, sacrifices and support to rebuild.

Consequently, he entreated the Public Utilities Regulatory Commission (PURC) to maintain the current utility tariff regime for electricity and water.

He said that would enable businesses to recover rapidly from the effects of the pandemic to enable the effective implementation of the comprehensive economic recovery programme of the government, dubbed Ghana CARES.

Survey outcomes

According to Mr Frimpong, various surveys conducted by the GEA pointed to the fact that some businesses had taken a nosedive, while others were struggling to recover from the effects of the pandemic.

Trends of the survey indicate that 62 per cent of employers had their business operations completely disrupted, while more than 75 per cent of them postponed their inve]stment decisions.

Again, 64 per cent of employers responded that demand for their products had fallen below normal levels due to the effects of the pandemic on their customers.

“Within this COVID-19 dispensation, we believe that the general benefits of maintaining utility tariffs at their current levels will far outweigh the revenue that will accrue to the utility companies from an upward tariff adjustment,” he said.

There are proposals for the PURC to review tariffs upwards to enable the utility companies to operate efficiently.

However, Mr Frimpong said while tariff adjustment might support the utility companies to rake in more revenue to facilitate their operations, the timing was inappropriate for such a policy direction.

He said for businesses to have a competitive advantage within the African Continental Free Trade Area (AfCFTA), it required that critical, delicate and sensitive input prices, such as utility tariffs, must be handled well to enable the country to harness the full benefits of the agreement.

The CEO said although utility tariffs had not been reviewed since October 2019, Ghana’s price index for electricity tariff was comparatively high, compared with that of other countries in West Africa.

Concerns

“Reviewing utility tariffs in this economic atmosphere will not only render the government’s economic recovery strategy ineffective but also place employers in an uncompetitive position on the international market in general and the West African sub-region in particular,” he said.

Mr Frimpong, therefore, urged the PURC to engage all stakeholders in the production, transmission and distribution value chain, including consumers, at all times to keep the people and businesses informed on matters relating to power outages to engender smooth business planning.

He said the GEA was aware that the ongoing power outages were driven by maintenance and repair works on a number of critical plants and equipment.