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09 October 2013

Subsidising utility tariffs will throw economy out of gear.

The Government of Ghana says it can no longer keep subsidising utility tariffs because it is having a damning toll on the nation’s debt stock.
Information and Media Relations Minister, Mahama Ayariga, told XYZ Breakfast Show Host, Moro Awudu on Wednesday that the “government in the past has also tried to resist increments but in the end...
what has happened is that…we will have to find resources to subsidise these utility companies and it is beginning to have some impact on the debt burden and so we cannot continue”.

He stressed that: “…We cannot sustain the process of subsidising in ways that are just increasing the debt stock”.

Ghana’s current external debt stock is Ghc43.9 billion representing about 49.5 percent of the country’s GDP as of August 2013.

The World Bank recently warned the West African nation about the ballooning debt stock which it says could plunge the country into the abyss if not reined in.

Mr. Ayariga said: “These are the realities that Government is confronted with when it comes to subsidising so it makes it difficult for us to comply with this threat that we must continue to subsidise even at the peril of throwing the entire economy out of balance or face the wrath of TUC activities”.

The TUC, on Tuesday, gave the Government of Ghana a 10-day ultimatum to reduce by one-third, the 78.9 percent and 52 percent increments in electricity and water tariffs, which took effect from October 1, 2013 or face the wrath of labour.

State power producer, Volta River Authority (VRA), requested a tariff increment of 137.5%.

Power transmitter, Ghana Grid company (GRIDco), which conveys power from the VRA and other generating companies to bulk customers such as the Electricity Company of Ghana (ECG), submitted proposals for an upward tariff adjustment of 39.36 percent.

The ECG which distributes power to homes and businesses requested a 166% increase in electricity tariff across board while the Ghana Water Company demanded an increase of 99.39%.

However, the Public Utilities Regulatory Commission (PURC) beat down the proposals after various meetings with the service providers.

The TUC intends rolling out a series of industrial protests, including strikes, if the Government fails to accede to its demand within the ultimatum.

Mr. Mahama Ayariga however says “I think that dialogue with the utility service providers and stakeholders is the way to go and we must all recommit ourselves to the automatic adjustment formula…so that we don’t have these types of increments that worry all of us consumers”.

Source: RadioXYZ

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