IMF recommends early decision on electricity tariff increases
The International Monetary Fund (IMF) has made recommendations to the government of Ghana to adjust electricity tariffs.
The recommendation which was made at the end of an IMF mission to Ghana is suggesting the adjustment to keep Ghana’s budget intact.
The recommendation was made after an IMF mission visited the country from 16 to 26 March 2010. The mission was led by Mr. Peter Allum, mission chief for Ghana.
The IMF suggested that an early decision in recommended electricity tariff adjustment which has been before the Public Utility Regulatory Commission (PURC) is needed.
Last week the government put on hold proposals for electricity tariff increases by the three players in the electricity sector until August this year. The increases proposed by the utility providers were up to about 150%.
Meanwhile the government has authorized public consultations being held by the PURC on the issue of tariff adjustment to continue.
It remains to be seen if the government will implement the increases when the time comes and how much the increases will be.
The country has been experiencing power shortages for some time now. The country’s only hydropower plant at Akosombo is facing a perennial water shortage which is affecting power supply, occasionally plunging the entire country into darkness.
The country has constructed a thermal plant in Takoradi to supplement its power supply needs and there is an ongoing project to build another 400 MW hydropower plant at the Bui dam in the Brong Ahafo region, but a lot more needs to be done to meet the power supply requirements that would bolster economic growth.
Presenting the 2009 Budget the Minister of Finance, Dr. Kwabena Duffuor indicated that Ghana’s energy sector is in dire straights.
He said, “An immense proportion (76 per cent) of the Sovereign Bond proceeds was earmarked under the Government of Ghana (GoG) 2008 Supplementary Budget to cover capital expenditures for VRA, GRIDCO, ECG and Bui Power Authority (BPA).”
“In addition, GoG has been providing direct payments to cover VRA working capital requirements for crude oil purchases for the thermal plants.”
He said that notwithstanding, the GoG budgetary transfers had not been adequate to cover revenue shortfalls and/or re-capitalize the three power utilities.
“Clearly, the current state of affairs is unsustainable and should not be allowed to continue,” he said.
To arrest this situation, Dr Duffuor said government would develop and implement comprehensive remedial measures, especially re-capitalization, that would ensure the long term financial viability of VRA, GRIDCO and ECG.
By Emmanuel K. Dogbevi & Dode Seidu