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Business News of Saturday, 18 November 2017


Electricity tariffs reduced due to over GH¢15m profit – Boakye Agyarko

Minister for Energy, Mr Boakye Agyarko, has explained that government decision to cushion Ghanaians by a reduction in electricity tariffs between 13 % and 21 % was informed by the fact that the country is making huge profits on electricity due to high electricity tariffs.

He said it would only take an insensitive government to maintain the current high electricity tariff when majority of Ghanaians keep complaining of paying so much for electricity.

According to Mr. Boakye Agyarko, before government arrived at the decision, the Ministry did a lot of analysis using electricity pricing derivatives namely Cost of Service(cost of production), Class Average( category of electricity consumption) and PURC Revenue Requirement, but realized that country is making supernormal profit of over ¢15million on electricity per annum.

“For example PURC Revenue Requirements was ¢6,743,173,709.98 representing the total cost of producing power and we assumed that 2.5% of the amount will go under the drain because of illegal connections and non collectables and when did the calculations for this we arrived ¢ 168, 579,342.75 and so when you add it to the PURC required tariff income you have ¢6,911,753,052.73. And when we did the actual revenue it came to ¢6,927,333,910.86, but it was in excess of ¢15,584,858.1

“So we decided that we will cut down the tariff to cushion Ghanaians they are suffering, he said.

Speaking on Oman FM’s political analysis programme “Boiling Point,” Mr Agyarko, said government is determined to ensure that electricity becomes very affordable in the future.

Boakye Agyarko, who blamed the high cost of producing power in the country on price disparities, said “after we engaged with power producers some of them have decided to reduce their price from 16cent per kilowatt to 11cent per kilowatt.”

“One of the things I kept insisting is efficiency,” he said adding “majority of them failed as far as heat rate is concerned.

“The lower your heat rate the more efficient you become,” he added.

He said “we have set a bench mark for them by indicating how much we are willing to pay and they have agreed to that.”

One of the strategies government is pursuing to make power cheaper, Boakye Agyarko, said is making sure that all our thermal plant are run on natural gas since it is cheaper than crude.

“When you produce power with gas it’s cheaper than crude oil. It is about 15% to 20% cheaper so our strategy is that by 2019 all our thermal plant will run on natural gas, “he said.