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06 July 2016

Power subsidies: ‘Fear of electorate fever’ grips gov’t – Kwaku Kwarteng

kwekuA Minority spokesperson on Finance Kwaku Kwarteng says the new subsidies on power has all the signs of a government gripped by fear of the electorate as general elections beckons.

Kwaku Kwarteng indicated that with elections expected in November, government’s subsidy is nothing more than a vote buying gimmick.

According to him, the subsidies as announced by government could end by December after the general elections in November.

Government has reduced tariffs on power from 67 per unit to 33 per unit for consumers using 50 units and below.

The relief, in real terms, means electricity consumers consuming below 50 units who are described as poor, will get 1.65cedi reduction in the cost of power.

Discussing the subsidies on Joy FM’s Super Morning Show, Kwaku Kwarteng laughed off the reliefs. He said the subsidies will add up to huge debts government already owes several power players in the energy industry.

According to him, in the unlikely event of an NDC victory in November elections, its PR machine would explain that rising debt levels is hampering the ability of power producers to generate and distribute power and will remove the subsidies.

Government would then ask Ghanaians to pay realistic tariffs for power, he predicted.

“This is just a postponement of something government wants to slap on us after the election”, he pointed out.

The rise and fall of electricity tariffs since 2012

Since 2013, electricity tariffs have gone up by 182.75%. It first went up  in October 2013 by 78.9 per cent. But government later slashed it by 25% so that consumers were asked to pay 59.18%.

In 2014, PURC reviewed utility tariff upwards twice. First in July, electricity tariffs went up by 6.1%.  Later in September 2014, the cost of electricity shot up by 6.54%. In June 2015, the Public Utility and Regulatory Commission again announced a 51.73% increase in electricity.

But before the year would end, the PURC on Monday December 7, 2015 announced a 59.2%  hikes in electricity ahead of the Christmas season.

In view of this, Kwaku Kwarteng questioned why government could not introduce the reliefs years ago but would introduce it in July.

“Now that they see elections coming….government comes around and says prices could be lower and there is a sustainable way to make it lower”, he said on the Joy Fm Super Morning Show Tuesday.

He said government was minded by criticisms from the NPP Presidential candidate Nana Addo Dankwa Akufo-Addo.

Akufo Addo has been advocating a reduction in tarrifs and blamed the high cost of power on taxes imposed by government.

He has argued that taxes make up a large part of the 19.28 US cents/kilowatt hour the consumer pays in Ghana while its neighbour, Cote d’Ivoire charges 9 US cents/kilowatt hour.

He is not alone in his belief that taxes are too high. Energy expert Wereko-Brobby has also suggested that the solution consumers want is not subsidies but a reduction in tariffs.

Dr. Charles Wereko-Brobby has said the increase in levies from 1% to 5% cancels out any negligible benefit that the subsidies are intended to provide.

Explaining the NPP position on the power crisis, Kwaku Kwarteng noted that corruption in the procurement of power projects is at the heart of the cost of power.

He singled out the AMERI power deal which he said was highly inflated “beyond imagination”. The deal to add 225megawatts was also done through sole-sourcing meaning that supplier was not competitively selected.

The Obuasi West MP said the subsidy was not arrived at after an honest analysis of the electricity tariffs regime.

“If around election you would implement policies that consumers can clearly read into like this, [then] you are on your way out”.

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