Government’s decision to absorb the cost of electricity for consumers for three months will cost an estimated 450 million dollars.
That’s according to an assessment conducted by the Institute of Energy Security, IES.
President Nana Akufo-Addo in his sixth national address on the coronavirus indicated that government will fully cover the bills of low-income consumers for April, May and June 2020, while regular consumers will enjoy a 50% reduction.
Speaking to Citi Business News, Executive Director of IES, Paa Kwesi Anamuah Sakyi, explained how his outfit arrived at the cost of the intervention.
“For the government intervention, it is likely to cost the country about 120 million dollars on monthly basis, and this estimation is based on the national consumption of about 1,630 gigawatts per hour for a month and an average end-user tariff of about Ghp88 per Kilowatt-hour (kWh) for both residential and non-residential users. It doesn’t take into consideration the total weight for lifeline consumers. It also doesn’t take into consideration the service charges. If you bring all these to the loop, we are likely to see about 150 million dollars per month and so for the three month period we are looking at about 450 million dollars for government to absorb,” he noted.
He also stated that, clearing all existing debts and potential ones for the power providers will generate the needed cash flow to ensure proper operations and maintenance of power systems.
“Stable and reliable power is a by-product of financial health of the power producers, GRIDCO the power transmitter, and the distributors,” he noted.
Following the outbreak of the novel Coronavirus in the country, there have been calls from many individuals and groups asking the President to offer them some relief.
But some stakeholders in the energy sector have asked government to tread cautiously as some of the interventions may not be feasible for the power sector.
The Institute of Energy Security, IES, had earlier said that it anticipates unstable power supply across the country in the coming days if government does not resource electricity service providers.
The Research and Policy Analyst at the Institute, Raymond Nuworkpor, said the already existing challenges in the sector may be worsened if funds are not provided immediately to support the roll out of government’s intervention.
Electricity subsidy must be targeted to sustain power sector – ACEP
Also, the Africa Centre for Energy Policy, (ACEP), in an earlier statement warned that government’s intervention of a complete waiver of the electricity bill of lifeline consumers of electricity and 50 percent reduction for all other consumers using March 2020 bill as the benchmark, will “endanger the sustainability of the power sector now and after the COVID-19 pandemic.”
Executive Director, Benjamin Boakye, in a statement said “this policy is well intentioned to support Ghanaians, particularly the poor and vulnerable, who are faced with significant socioeconomic risks, resulting in part, from their reliance on daily wages and loss of economic livelihood. ACEP is of the considered view that not everybody captured in the subsidy needs it. Rather, the measure further endangers the sustainability of the power sector now and in post COVID-19.”