- Want end of industry’s subsidy to households
Experts in the energy sector have called on government to effect changes in the pricing of tariffs in the country, to eliminate the policy which makes industries subsidise the amount households pay for their consumption of power – saying the practice has become a burden on businesses and is making them globally uncompetitive.
The experts, who spoke on the theme ‘Powering Ghana’s Industrialisation Drive: Progress Made Toward Reliable, Affordable and Clean Energy’, at this year’s Ghana Economic Forum organized by the B&FT in Accra, said the policy has added to factors accounting for the high cost of power to industry – which in turn increases operational cost of businesses and puts them in a disadvantaged position compared to their competitors in other countries.
One of the panellists, Ishmael Adjekumhene – Executive Director of the Kumasi Institute of Technology and Energy (KITE), said the high cost of power, among other factors, has resulted in the closure of some businesses; hence, it is about time the policy was reversed.
“We have a tariff system that is actually penalising industry because industry is cross-subsidising residential consumers. How do we deal with that? There are companies which have been disconnected from the grid because they cannot afford to pay for power, for the simple reason that industry is subsidising residences.
“So, there has to be a policy in place that addresses this problem… If we want industry to be competitive, then the tariff structure has to change. It is about time we faced that reality, otherwise all our industries will not be able to afford power,” he said.
Executive Partner of Arthur Energy Advisors, Engineer Harriette Amissah-Arthur, also bemoaned the cost of power in the country which, she said, has made industries uncompetitive compared to their peers on the continent and in the world; hence her support for the policy to be scrapped.
“Industries in Ghana compete with other industries in the world. So it is important for us to look at how we run our industries and how they are run on the world stage. In the medium- to long-term, our goal should be building a sustainable power sector. No matter the technology we use in this country, the key thing is for us to be competitive. I agree that households should not be subsidised by industry,” she said.
Segun Sowandey, Partner-KPMG Nigeria, also re-echoed the point, saying: “You will find that in most jurisdictions, especially in the West, the cost of power to industry is usually cheaper than the cost of power to residences. But in Africa and many emerging markets, cost of power to industry is higher than the cost of power to residential consumers. So if we truly want to address the fundamentals, then we must eliminate those cross-subsidies,” he said.
Dr. Seth Debrah, Director-Nuclear Power Institute, said besides eliminating the cross-subsidy factor, another way of ensuring industry has affordable power is to bring on board nuclear energy – which, he admitted, has an initial high cost, but becomes the cheapest source of power generation over the long-term.
“Nuclear power is high upfront cost, low running cost. Nuclear is the only power plant that takes care of its waste even before you begin running it. So is unique in its own sense and that is how come nuclear is cheap, because you can have a high upfront cost and low running cost over a very long period. In South Korea, they are doing around 3 cents per kilowatt hour,” he said.