The Africa Centre for Energy Policy, (ACEP), has warned that government’s 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, 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.”
It will be recalled that on Thursday, 09 April 2020, President Akufo-Addo, whiles addressing the nation in his sixth national address on updates on government’s efforts to fight COVID-19, announced that government will entirely cover the bills of low-income consumers of electricity in the country for April, May and June, as one of the ways to offer relief to Ghanaians.
But the Energy Think Tank wants government to rather offer subsidy for all lifeline consumption for everyone which comes at cheaper cost.
“This ensures that at least everybody has the option to enjoy electricity for the most essential purposes. Any consumption above lifeline should be paid for by the consumer. The burden on government for this approach will be GHS92 million a month, significantly lower than the GHS1 billion under the proposed policy. This generates a saving of GHS2.1 billion which can be used for other interventions to mitigate the impact of COVID-19,” the Executive Director explains.
Lifeline consumers are those who consume up to 50kw electricity each month. This is not necessarily the poor even though that is the basis for setting the lifeline benchmark.
In addition, ACEP urged government to quickly map out large households in poorer communities who do not benefit from lifeline tariff because they are too many on a single meter.
“This will ensure proper targeting of the most vulnerable in society for the intervention. The current implementation of the lifeline policy is known to be ineffective at targeting the poor in society. This means that further efforts are required to ensure that the poor can be supported in this era.”
ACEP further asked government to spend part of the proposed expenditure on electricity consumers to identify and support those most impacted by the pandemic.
“There are citizens who have lost their jobs and require urgent support while they look for another job. These people can be identified through GRA systems and working with employers who have laid off staffs. Many trotro drivers and petty traders are also out of business and require support from government. The GHS2.1 billion is more than enough to provide direct cash transfers of GHS 200 for 3 million impacted citizens for three months. It is therefore pointless to rather target the rich through electricity tariffs,” the statement added.
Meanwhile,the Institute of Energy Security, IES, says by its assessment, the intervention will cost government some 450 million dollars.
