Business News of Mon, 20 Mar 20176
Over 400 workers lose jobs as steel factory closes
About 400 workers of a steel company in Tema, Rider Steel Ghana Limited have been laid off due to the company’s inability to pay for what they describe as unfair and high electricity tariff.
According to the company, which is located within the Tema Export Processing Zone, it is being charged 52 pesewas per kilowatt hour of electricity by a privately owned power distribution company, Enclave Power Company(ECP), while other steel companies are charged 21 pesewas per kilowatt hour upon negotiation with the ECG.
Speaking to Citi Business News, the General Manger of Rider Steel Company, Tarini Prasad Patnaik stated that close to a thousand direct and indirect workers are now jobless due to the closure.
Mr. Patnaik stated that ECP is the only company authorized to supply electricity to companies operating within the Tema Processing Zone.
“We halted operations in October 2016. I can confirm to you that over 1,000 people who worked directly and indirectly with us are now jobless. Cost of doing business is too high. We pay 250% more than other steel companies,” he lamented.
Mr. Patnaik told Citi Business News Rider Steel Ghana is a registered Ghanaian non-free zone Steel factory with a capacity of 80,000 Metric tons per year.
“The company, a subsidiary of Rider Glass Company in China is worth $15 million in investment and began operations in 2013. Like other steel factories in Ghana, it is registered with the Energy Commission as a bulk consumer due to their heavy load factor.
This gives the factories the authorization to negotiate preferential purchase price and to enter into individual purchase contract with the independent/ government power producers for their power needs”, he said.
He stated that since 2010, ECG has negotiated a preferential price of GHC 0.2185/Kwh on behalf of the steel companies.
“However, since the introduction of new tariffs by the Public Utilities Regulatory Commission in December 2015, the ECG was instructed by the PURC not to charge the companies the revised rates in a bid to prevent them from struggling under the prevalent global macroeconomic environment for the steel industry,” he said.
“But the private power distributor, ECP, continued charging the PURC rates which is close to 250% more than what is being charged other steel factories. The other steel company within the enclave, United Steel Company Limited has also stopped the production of steel as a result of the high cost of production,” he stressed.
According to Mr. Patnaik, ECP is unwilling to agree on credit arrangement with the company.
“On an average we were paying close to a million dollars every month and we didn’t have any credit arrangement. We paid the entire amount every month and this being a private and new company you have to pay within the stipulated time.
We could only delay for seven or ten days else there would be a power outage. In October the bill was due to be paid in November, which we didn’t pay protesting about the high tariff. Our lights got disconnected”, he explained.
He maintained that management of Rider Steel is asking for equitable treatment in terms of tariff charges.
“We have been talking to everybody, Energy Commission, PURC, Ministry of Energy, and Ministry of Trade but nothing has come out of that. We also met the Economic Management Committee and they have been very helpful and have been trying to sort out the issues with the new government”, Mr. Patnaik lamented.
He disclosed that some Jordanian investors in the company have given its management up to March 15, 2017 to resume operations or they pull out of Ghana completely.
Currently, all 400 local staff of the company have been sent home, pending a possible resumption of operations at the factory.
“Right now we are not operating and so if by the end of March we don’t get any response to this problem, we will close down and move out of the country completely. This will make us lose all the investments we have in Ghana, almost $20m”, the frustrated MD said.
Moving out of the enclave is not an option open to the company as it would cost it more time and money.
Mr. Patnaik explained that’ “moving out of this place will give us another cost of 5 million dollars and at least a year and half to build up because steel works are heavy industries that need a lot of civil work”.