Government is expected to cumulatively spend GHS1 billion to absorb the electricity bills of Ghanaians for April, May and June, as part of measures to offer some relief to consumers in the wake of tightened financial conditions caused by the novel Coronavirus pandemic.
The package will cover over 86 percent of individual consumers and industries on the national grid.
This was revealed by the Minister of Energy, Mr John Peter Amewu, at a press briefing in Accra on Thursday 16th April, 2020.
He said the amount would cover the electricity bills of consumers of the Electricity Company of Ghana (ECG), the Volta River Authority (VRA) and the Northern Electricity Distribution Company (NEDCo).
It will be recalled that President Nana Akufo-Addo in his nationwide address on April 9, 2020, on measures being taken to mitigate the economic impact of the coronavirus on Ghanaians, announced the introduction 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.
Giving a breakdown of the package, John Peter Amewu explained that, “In Ghana, consumption of 0-50kWh is defined by PURC as the lifeline consumption, which is subsidized to ensure access and use of electricity by low income customers. A lifeline customer can use one TV set, two lighting bulbs, a table top fridge and fan for a limited number of hours.
He also stated that, “The COVID-19 presidential relief will positively affect customers differently depending on their customer classification or consumption level.”
The Minister noted that for ECG, the company caters for 1 million cluster population. This covers about 27.4 per cent of the total customers of ECG.
A cluster population is “the number of meters and not the population of people,” he explained.
“This means that at the current tariff level, government would absorb an estimated amount of GHS 8.5 million per month for [life line customers].
He further explained that, “For non-life customers, a 50 per cent discount on their electricity bills would translate to GH₵235.4 million for 278, 086 residential customers and 160,008 for special load tariff customers,”
“A total relief for ECG customers per month based on the estimated revenue would be GH₵244 million per month translating to GH₵732million for the months of April, May and June, he added.
For the Northern Electricity Distribution Company (NEDCo), Mr Amewu stated that, “ the total government relief for all customers was about GH₵47 million per month or GH₵ 141 million for the three months.
He said the reliefs covered of about GH₵10.9 million per month or GH₵32.9 million for three months for a customer population of 569,000 life customers.
For non-life customers, he said, the figure was about GHS36 million per month or GHS108 million for three months for 369,000 non-life customers.
For the Volta River Authority (VRA), Mr Amewu, explained that a total relief equivalent to GHS5.5 million per month or GH₵166.4 million for 3 months would be spent.
He further stated that for VRA’s Consumers which includes 12 mining companies, VALCO and other manufacturing customers such as Aluworks, Diamond Cement Limited, Savannah Cement Limited and Enclave Power Limited, government would spend an estimated GHS42.4 million per month or GHS127.2 million for the three months.
VALCO is estimated to cost government GHS4.8 million per month or GHS14.4 million in total for the next three months, while the other manufacturing companies would cost GHS7.9 million per month or a total of GHS53.7 million for the three-months period.
Electricity subsidy must be targeted to sustain power sector – ACEP
Following the President’s announcement, the Africa Centre for Energy Policy, (ACEP), warned that government’s introduction of a complete waiver will, “endanger the sustainability of the power sector now and after the COVID-19 pandemic.”
According to them, though the gesture by government is benign, not everybody needs the subvention.
Executive Director, Benjamin Boakye, in a statement issued on the 14th of April, 2020, 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.”
