New tariffs, taxes to help Mahama keep his promise to fix energy crisis

Employment and Labour Relations Minister, Haruna Iddrisu says increased utility tariffs and some fresh taxes are meant to help President Mahama fulfill his promise to fix Ghana’s cyclical energy crisis once and for all.

His explanation comes after a meeting with Organised Labour pushing for a reduction in the tariffs ended in deadlock.

The Public Utilities Regulatory Commission (PURC) announced in early December 2015, electricity and water tariffs would go up by 59.2% and 67.2% respectively. The increases took effect from December 14, 2015.

An unhappy labour front and a government under pressure entered into dialogue over the increase. But the first round of talks has ended with no change in either side’s stance.

Taking its argument to the public, the government says Ghanaians need to appreciate that the decision to increase tariffs is difficult but necessary to rescue the energy sector from collapse.

President Mahama on February 26, 2015, told Ghanaians in his State of the Nation address, his approach to the current power crisis is not to manage it as past governments have done, but to fix it once and for all.

“I do not intend to manage the situation as has been done in the past, I intend to fix it. I, John Dramani Mahama will fix this energy challenge.”

In view of this promise, there will be no stepping down of the utility tariffs and Energy Sector Levy. Reversing the tariffs and levy will be inimical to stabilizing the economy and resolving the energy crisis, government has maintained.

Haruna Iddrisu also explained huge outstanding debt of GHC4.5 billion which need to be settled informed the decision to introduce the new Energy Sector levy. The levy has caused an increase in petroleum prices by up to 28%.

Haruna Iddrisu also explained Ghana’s increased reliance on thermal energy means government needs money to power thermal plants.

“The country needs 98 million cedis a month to keep those generators running in order to keep the country out of darkness”

He also explained the government is indebted to Electricity Company of Ghana and Volta River Authority and it is hurting the energy distributor and generating companies’ ability to balance their books.

The government, he said, also owes GHC300million to road contractors some of whom have not been paid for work done more than four years ago.

Some 40 pesewas has been inserted into the Energy Sector Levy per litre of petrol to help government face its debts to contractors head-on.

He said Ghana would sink into a deeper crisis if the government does not take steps to adjust tariffs and introduce taxes.