Tax-free renewable power systems will make electricity tariff increases bearable

Fri, 11 Oct 2013 Source: Kofi Thompson

By Kofi Thompson

As a people, we face a bleak future, if our nation does not make the needed investments, to modernise the energy sector of our national economy - and make it one of the most efficient in the world.

The only way to modernise Ghana's power sector, is to invest money in that area of Ghana's economy - and by so doing, eliminate the inefficiencies that have bedevilled it for decades.

The companies that produce power in Ghana, ought to be able to recover their costs and make a profit, to enable them stay in business - as is the case for all power-sector businesses the world over.

That is the only business model that will enable them survive in the long-term. That is a real-world cold fact of modern life that all Ghanaians must accept.

Yet, precious few in Ghana accept that it is unrealistic, in the 21st century, to continue expecting to have reliable power delivered by a modern and efficient energy sector, if consumers refuse to pay the true cost of producing electricity.

The fact of the matter - and surprising though it might be to many - is that consumers in Ghana can all cope with the increase in tariffs for water and electricity - by taking simple measures to eliminate wasteful use of water and electricity at the individual and household levels.

If they want a positive outcome to the furore created across the country, by the increase in electricity tariffs, our educated urban elites must see the crisis brought about by the increase in utility tariffs, as an opportunity to increase the share of renewable energy, in Ghana's power-generating mix.

As a people, we must aim to make it possible for households throughout Ghana, to be in a position to buy solar and other renewable energy systems - because they are affordable: and reasonably-priced consumer credit for their purchase, readily available nationwide.

Why do the powers that be not use that noble objective, as an opportunity to empower Ghana's leasing industry, for example - by making all income from leasing solar power and other renewable energy systems tax-free?

Will it also not help stabilise many of the shaky entities in the savings and loans industry too, if one of the areas they could focus on, was financing the purchase of renewable power systems by households, educational institutions, and commercial entities across Ghana - were the government to make income they derive from that tax-free?

The mounting public discontent over electricity tariff increases, and the lack of an imaginative and appropriate response to it from our ruling elites, illustrates perfectly the inability of so many amongst our educated urban elites, to turn seeming disasters into opportunities.

Surely, a more creative response to the crisis brought about by the increase in electricity tariffs, is for the government of the day to make the entire supply-chain for renewable energy systems in Ghana, tax-free?

Apart from the spurt in consumer demand in the national economy that that will engender, psychologically, that exciting green-economy prospect that also leverages the new global low-carbon development model, will make electricity tariff increases bearable for all in Ghana. A word to the wise...

Columnist: Kofi Thompson