Reduction on Electricity Tariffs should have a Focus

I am happy the president has spoken emotionally well at the independence parade. Prior to the celebration of Ghana @61, Government of Ghana (GOG) reduced electricity tariffs on electricity consumption via its mouth piece Public Utilities Regulatory Commission (PURC). The announcement was a 17.5% reduction in electricity for residential consumers , 30% reduction for Non-residential consumers, 25% reduction for Special Load Tariff consumers and 10% reduction for mines. Benchmarks: 1. Consumer interest2. investor interest3. Economic development Interest4. Natural Gas requirement

My Opinion:

I see the main reason to this reduction on electricity tariff is to help government's industrialization agenda. over 216 factories must start any moment soon and needs investors to set them especially the expatriates. This reduction is expected to boost investors confidence so government can fulfill it populist industrialization campaign that brought him to power. Going forward, the government did not quantify any measurable outcome, say, in six or nine months from March, Y new jobs would be created, translating into X number of goods and services produced. This would increase the GDP by Z%. Again, government, is loosing A amount due to the cut but we will broaden the tax base by increasing direct and indirect taxpayers by B%.

This would help government to increase revenue target by K% with an expected surplus of M%. we do not know if the reduction is a government subsidy. Nothing of such is mentioned. Focus: The reductions on electricity seem to have no focus. What main sector of the economy is the government focusing to augment production, human capital or investment? The benchmark does not guarantee achieving it intent till 2019 for a review of upward or downward. Besides, the economic doctors; IMF have also conditioned GoG to work hard to increase revenue. This was a conditionality in 2012 and repeated in 2018.

The government equally owes the Electricity Company of Ghana (ECG)  huge sums of money. The main reason for the reduction is to ease and reduce the cost of production and create employment in the short term. What will guarantee the fact that businessmen would reinvest profits made to increase production as these businessmen evade taxes at all times?  


  Peter Bismark