Recent power outages could derail economic recovery – IES warns

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Gains made towards returning the economy to growth path are at risk of being eroded by recent power transmission challenges, the Institute of Energy Security (IES), has said.

The economy contracted in the second and third quarters of 2020 by recording a recession – the first time in 37 years, due to the impact of the coronavirus pandemic. Government’s revised full year growth was pegged at 1.9 percent and the government is hoping to achieve an improved 5 percent growth this year.

However, the recent power outages across the country, IES says, are frustrating the smooth running of businesses and homes alike and poses a threat to economic recovery from the pandemic shock, if necessary action is not taken.

“Until the current power incidents recorded cease, the Ghanaian economy may struggle to come out of the recession caused by a pandemic. The government must be guided by the events of 2014–2016, and how it affected the Ghanaian economy,” it said in a statement to B&FT.

Since the beginning of the year, there have been several major power supply cuts, as experienced on 27 February, 2021, 03 March, 2021, and also the total shutdown experienced on 07 March, 2021.

These outages, IES lamented, have left a lot of people and businesses in the dark, distorting plans and activities, and affecting negatively the cost component of operation of businesses, that are just recovering from the pandemic.

Even though it said power outages (dumsor) is not a new thing to the Ghanaian economy, it warned that the current power challenges require a swift intervention because “we are not in normal times” and that aside the outages affecting health service delivery, it may negatively affect economic activities in the service and industrial sectors.

Reliable and consistent power supply, the energy think-tank explained, is essential for particularly developing economies at this moment. “It is more vital to modernizing agriculture, increasing trade, saving lives, improving transportation, empowering women, expanding industries serving as building blocks for escaping death, poverty, and enriching lives.”

On how the sector could be positioned to support the recovery process, the statement said: “If government is serious with rebooting the economy, then it must ensure that the utilities within the power value chain are resourced financially, to ensure operational efficiencies in power delivery.”

It further asked government to ensure that cash-flow constraints which makes it difficult for the power transmitter, Ghana Grid Company (GRIDCo) and distributors to improve on their networks, is swiftly addressed, adding: “After all, it is in government’s own interest to ensure efficiency in power delivery, as it stands as the driving force for the economic recovery.”

Apart from the pandemic’s impact on the economy, the Ghana Health Service reported this month that 740 persons had died from the virus, with 90,287 of COVID-19 recorded cases.

Meanwhile, a report released by the Ghana Statistical Services (GSS) in collaboration with the United Nations Development Programme (UNDP) and the World Bank stated that about 36 percent of operating firms had closed down during the partial lockdown periods, and 16 percent continuing to close.

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