Government Loses ?20 billion

Government’s ?5,000 rebate for low-income electricity consumers will cost the nation ?20 billion for the next half of the year. An estimated 30,000 under fifty-units electricity consumers are expected to benefit from the package. Government announced the rebate for lifeline consumers after the Public Utilities Regulation Commission announced new tariffs. Under the new tariffs, 50 units of electricity consumed will now cost ?14,000 but government announced a relief for lifeline consumers and absorbed the difference.

Senior Minister, J. H. Mensah however told the Business and Financial Times that the subsidy is not intended to be in place for long. He denied the assertion that government’s decision to introduce the rebate contradicts the cost recovery programme. According to Mr. Mensah, the decision was prompted by the fact that the Public Utilities Regulatory Commission did not adequately allow government to prepare a package aimed at mitigating the harsh effects of the increase in low-income earners in the country, especially the poor.

He explained further that the ?20 billion subsidy would go to Electricity Company of Ghana to help them to achieve their revenue target for the year vis a vis the new tariffs. “So gradually, we are on course towards the cost recovery aspect of our economy. As far as the utilities are concerned, government hopes to completely withdraw the annual bulk subsidy.”

Asked whether the “no-subsidy-for-tariff” policy was not dictated by the International Monetary Fund and World Bank, he denied this assertion. The Senior Minister also denied that the introduction of the subsidy was politically motivated saying “government took the decision because we thought it economically right and morally justified”.

Government’s ?5,000 rebate for low-income electricity consumers will cost the nation ?20 billion for the next half of the year. An estimated 30,000 under fifty-units electricity consumers are expected to benefit from the package. Government announced the rebate for lifeline consumers after the Public Utilities Regulation Commission announced new tariffs. Under the new tariffs, 50 units of electricity consumed will now cost ?14,000 but government announced a relief for lifeline consumers and absorbed the difference.

Senior Minister, J. H. Mensah however told the Business and Financial Times that the subsidy is not intended to be in place for long. He denied the assertion that government’s decision to introduce the rebate contradicts the cost recovery programme. According to Mr. Mensah, the decision was prompted by the fact that the Public Utilities Regulatory Commission did not adequately allow government to prepare a package aimed at mitigating the harsh effects of the increase in low-income earners in the country, especially the poor.

He explained further that the ?20 billion subsidy would go to Electricity Company of Ghana to help them to achieve their revenue target for the year vis a vis the new tariffs. “So gradually, we are on course towards the cost recovery aspect of our economy. As far as the utilities are concerned, government hopes to completely withdraw the annual bulk subsidy.”

Asked whether the “no-subsidy-for-tariff” policy was not dictated by the International Monetary Fund and World Bank, he denied this assertion. The Senior Minister also denied that the introduction of the subsidy was politically motivated saying “government took the decision because we thought it economically right and morally justified”.