Industry players are worried over a possible increment in tariffs, particularly electricity, as part of the outcome of discussions with the International Monetary Fund (IMF) – saying such a development would worsen the plight of domestic producers.
Already, the Public Utilities Regulatory Commission (PURC) has given notice of announcing new utility prices for the 2022 to 2027 period on July 15 – after receiving proposals from the Ghana Water Company Limited (GWCL) and the Electricity Company of Ghana (ECG) for 334 percent and 148 percent tariff hikes respectively.
Conveying the unease of stakeholders as a panellist during the maiden 3Business Colloquium, Chairman for the Greater Accra Regional arm of the Association of Ghana Industries (AGI), Tsonam Cleanse Akpeloo said: “We anticipate that the price of electricity will go up, and for us in industry about 30 percent of our total production cost goes to power; and we are saying it is too high already, so given that the price of power will go up, it has left us very concerned,” he explained
Despite the consensus of panellists (Minister for Information, Kojo Oppong Nkrumah; Director of Research at the Institute for Economic Affairs (IEA), Dr. John Kwakye; and Head of Research at the African Centre for Economic Transformation (ACET), Dr. John Asafu-Adjaye) present that there are existing structural challenges in the economy which must be addressed, primarily through increased production, Mr. Akpeloo suggested there are too many factors currently hampering this.
Chief among them, he noted, is instability of the cedi, which he suggested is responsible for the muted contribution of the sector to Gross Domestic Product (GDP).
Even as the Producer Price Inflation (PPI) accelerated to 33.5 percent at the end of May, the AGI Greater Accra Chairman warned that rising prices are constituting a major disincentive to local producers.
“At the bottom line is the exchange rate. Most of our raw materials are imported and the rate keeps changing rapidly, making imported items cheaper for the end consumer. In addition, these imported items benefit from the benchmark values. While we can share some of the cost with consumers, there is a limit to how far we can go,” he said.
Another aggravating factor, he suggested, is the perceived lack of a clear policy protecting local industry. This has made neighbouring countries more attractive for domestic players, as well as investors.
With the state commencing engagements with the Fund, Mr. Akpeloo said his outfit will seek an audience with managers of the economy on shared concerns while offering relevant input.
“We intend to engage the Ministry of Finance to see how the AGI can be part of this conversation. We would like our voices to be heard in the conversation, as there are many elements which affect us directly,” he said.