Free electricity: ACEP wants govt to come out with plans of financing

Timothy Ngnenbe Apr - 11 - 2020 , 10:40

The Africa Centre for Energy Policy (ACEP) has called on the government to come out clearly on how much has been programmed to absorb electricity bills of consumers and how that expenditure will be financed.

According to the Energy think tank, the country's energy sector was plagued with huge financial challenges and that could deepen the woes of the sector if due diligence was not done in implementing any interventions.

President Nana Addo Dankwa Akufo-Addo announced in his sixth address to the nation on the Coronavirus (COVID-19) pandemic last Thursday that the government would absorb the entire electricity bills of people who consumed zero to 50 kilowatts hours (KWh) of power a month for the next three months.

Additionally, he indicated that residential and commercial consumers of electricity would have 50 per cent of their bills absorbed using their March's bills as the benchmark.

The interventions formed part of measures to mitigate the negative impact of COVID-19 on people and businesses in the country.

Diligence

However, speaking to the Graphic Online on April 10, 2020, the Executive Director of ACEP, Mr Benjamin Boakye, stressed that the government's move was likely to worsen the ailing energy sector, especially when the government had not disclosed how it was going to fund that expenditure.

"The reality is that electricity is expensive and the total bills for Ghana every month is about $350 million . If the government is taking 50 per cent of this amount, it translates into close to three billion Cedis for three months.

"If the government intends to absorb that cost, it is prudent for all of us to know where that money is coming from because ultimately, the government only spends what we have given it or they borrow," he said.

He stressed that given that the 2020 budget did not make any provisions for such an expenditure, it was prudent for the government to make known how it would scale the hurdle of resource constraint emanating from missed revenue projections to honour that audacious intervention.

Mr Boakye also observed that the energy sector debts was still a major challenge that had to be dealt with for reliable power supply to all consumers.

Lifeline

The President had indicated in the address that the government would "fully absorb electricity bills for the poorer of the poor, that is for all lifeline consumers, that is free electricity for persons who consume zero to 50 KWha month."

Touching on that waiver, Mr Boakye said there was the need for that intervention to be properly targeted to ensure that it actually catered for the right people.

He said the lifeline should be extended to at least 200KWh to benefit those who really needed that support.

"The poorest of the poor mostly live in compound houses and use the same meter so if the lifeline is 50 KWh, it will benefit private persons who live in their own apartments and use their own meters," he said.

Background

President Nana Addo Dankwa Akufo-Addo announced a number of measures to mitigate the impact of COVID-19 on citizens and businesses.

Among the interventions are the waiver of water bills; announcement of three months tax holidays for frontline health workers; 50 per cent salary allowance for health workers; and GH100 million stimulus package for businesses.

To further mitigate the impact of COVID-19 on citizens, the President on Thursday, April 9, announced the absorption of the entire water bills of consumers who consume up to 50 KWhs while residential and commercial consumers will benefit from 50 per cent discount on their bills.