The Electricity Company of Ghana(ECG) has confirmed the introduction of subsidies but says the move will not change the current tariff structure approved by parliament last year.
According to the power distributor, the subsidies introduced will in no way substitute the current tariff structure which includes taxes and levies.
Speaking to Citi Business News, the Public Relations Manager of ECG William Boateng said the new system took effect from the 1st July 2016.
“Nothing has been touched on the tariff itself given to us by the PURC and gazetted especially the residential ones. The point we are making is that there is this exclusive lifeline where it takes care of the vulnerable,” he explained.
He stated that with the new arrangement, the level of power consumed will be subsidized to include a larger part of the population.
“Now all customers will enjoy the subsidies introduced, which means the first 50 units consumed will only attract 33 pesewas per unit which includes levies and taxes,” he stressed.
He pointed out that the subsidy will affect about 400,000 out of the 3.1 million customers including non-residential, with about 2.3 million being residential.
He added that the 400,000 will benefit from the new arrangement since they will fall under the lifeline which is between zero and 50 units which is expected to attract only a charge of 67 pesewas per extra unit consumed.
The introduction of subsidies follows government’s extensive consultation with all stakeholders of the Power Sector.
All customers of ECG can now enjoy the lifeline which until the announcement was exclusive to only those who consumed units within the first 50 unit’s band.
Meanwhile, Citi Business News has gathered that the subsidies will last for six months and expected to cost the government some 300 million Ghana cedis.
Figures released by the ECG on the new subsidies to be enjoyed reveal that residential households who consume between zero and 150 units will enjoy government subsidy of between 0 to 4 percent while those who consume more than 150 units will enjoy nothing.
For non residential, those who fall within the 0 to 150 units will also enjoy between 0 and 7 percent of government subsidy.
Dr Charles Wrekko Brobbey on subsidies
But a former CEO of the Volta River Authority (VRA) and policy analyst, Dr Charles Wrekko Brobbey has rejected claims made by government that it has introduced subsidies to cushion low level consumers of electricity.
“It is not true; you are being charged VAT, energy levies, street light among others and those have gone up from almost 1 to about 5 percent…when you say you are subsidizing something, it means you are charging below how much it costs,” he debunked the assertion.
He criticized government over its failure to effectively implement the lifeline tariff system that was meant to cushion some low level consumers of electricity.
Deputy Minister of Power, John Jinapor defends subsides
Meanwhile the Deputy Power Minister, John Jinapor has defended the move.
Speaking on the Citi Breakfast Show, Mr. Jinapor explained that the subsidies are in categories and bands but will definitely bring relief to users.
He added that the government would be paying for the differences in the cost of power as a result of the subsidy.
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Norvan Acquah – Hayford/citibusinessnews.com/Ghana