Government subsidies for electricity greater than the amount spent on free SHS

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A domestic electricity meter

The government pays around four billion dollars to subsidize the energy sector, said Habibu Adam, senior economist, in the office of the senior presidential adviser.

Mr Adams said the subsidy payment was more than the money spent to implement the Free High School (FSHS) policy, adding that it was because Ghanaians were not paying the correct rate.

He said that due to the huge financial burden on the government, it was time to review the electricity tariff as it was unrealistic to continue subsidizing electricity.

Mr. Adam was speaking at a seminar organized by the Ghana News Agency for state and non-state actors to address national issues.

Speaking on the topic: “The strength of the Ghanaian economy: the financial services sector and other sectors of the economy,” said Adam, Ghanaians have suffered from electricity rationing for nearly four years.

He said the nuclear power plant government believed it was wise to help companies revive and expand after most cut production due to the huge amount of money being spent fueling them. generators.

He said the government had done this by drastically reducing the cost of electricity, which he said deprived the Ghana Electricity Company (ECG) of a lot of revenue, noting that there had no tariff adjustment in the past two years.

“You have realized that in the last two years there has been no adjustment and that what we are paying now is still less than what we were paying in 2015, but someone has to pay for it and the government pays a lot. “

He said that the money collected by ECG from customers was not enough to cover the cost of its operations and so were the independent power producer (IPP), the fuel suppliers for the thermal generation and the Ghana Grid Company (GRIDCo).

“For example, if you look at August, the bill was around 900 million GHC and the money collected by ECG after removing all other legal deductions, what was left was 540 million GHC.

“The money that was needed to pay everyone in the value chain was around 900 million GHC, so around 300 million GHC was unpaid and it’s only monthly, which means we don’t pay the good price, ”he said.

He said Ghana’s energy cost was very high in the West African sub-region, saying this was in part due to the expensive power plants that were installed during the energy crises.

“It’s a take or pay contract, so whether you take it or not you have to pay for it, the pity is that at that time the peak energy demand was around 2,700 megawatts of energy. energy and, unfortunately, we signed excess contracts. of 5,000 megawatts.

“So almost 2,300 megawatts is energy that we don’t need, but because of the purchase or payment contract we have to pay for it, so at the end of the year it cost us over $ 500 million and all are on the head of the ECG. the government must therefore come and pay.

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