Halting Utility Prices Dangerous For Economy – Gov’t Warned

The Institute of Energy and Climate Change Policy (IECP) has cautioned the Akufo-Addo government against plans to halt the increase in utility prices in the short-term.

According to IECP, the plan is dangerous and will worsen the financial position of utility providers in the country and eventually lead the country into a period of erratic power supply popularly known as ‘dumsor’.

President Akufo-Addo’s nominee as Finance Minister, Ken Ofori-Atta in an interview after his nomination stated that he will ensure a holdup in utility prices in the short-term.

But according to the group, previous interference in the pricing of utilities in the country has resulted in utility companies performing inefficiently.

In a statement, it said, “This interference might not be the best way to go in bringing relief to consumers. For a very long time in the history of the country, energy security, particularly in the electricity sector, has been a major problem.”

“Both inadequate supply and increased demand have been the main underlying causing factors, albeit the latter has received very little attention. On the supply-side, the major causes have been the below marginal cost pricing and insecurity in fuel supply, particularly gas supply. The below marginal cost pricing arose due to governments effort in the past to provide a budgetary relief to end-users of electricity.”

“This has, however, created a dual problem in the electricity sector. First, the move has deteriorated the financial position of the utility companies, which has culminated into the huge debt the utility companies face; a problem we are still confronted with and have to deal away with as a country.

Second, the decision by government to provide a budgetary relief via a visible hand-made end-users of electricity irresponsible; this increased energy wastage and deteriorated energy conservation.”

It said while a reduction in utility prices will be helpful to Ghanaians, it must not be determined by government but by the consumers.

“Having a pricing structure that incorporates this incentive will not only drive the incentive to be energy efficient among end-users but also drive the general electricity tariffs down.”

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(Via: CitiFM Online Ghana)

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