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Opinions of Thursday, 22 July 2010

Columnist: Agyemang, Frank

Tariffs Negotiations: The Longer The Worse For Industry

Our national development is basically dependent on the performance of our private sector, considered as the engine of growth. Believe it or not, the private sector remains the fulcrum of our national economy. It is therefore prudent to tread cautiously when it comes to taking decisions that have reflection on their output especially tariff increments.
Indeed, it is commendable that the Government has stepped in requesting the Public Utility Regulatory Commission (PURC) to consider the worries of Trade Union Congress (TUC), the Association of Ghana Industries (AGI) and other stakeholders. This at least is a positive signal indicating government’s commitment to ensuring a harmonious industrial atmosphere which is a major step towards achieving the “Better Ghana” agenda.
How can we attain the ‘Better Ghana’ agenda when factories decide send home some of their workers due to the high utility costs? Some high energy intensive industries have already served notice that they might send away some of their workers should the new tariff be maintained. AGI has been notified by some of its members that should the increased tariff be maintained, they are going to cut down on the number of workers, notably Blue Skies, Duraplast, Qualiplast, Ashfoam and Aluworks.
Though PURC announced average increase of 89% for electricity, industry can confirm that is not the realities when it comes to operations. Some companies have observed over 150% increment in their electricity bills. For instance, for the Steel industry, Textiles and Garments, Pharmaceuticals and Household Manufacturing industries, the new tariff translate to 170% to 200% average increase. The Timber Industry, which boasts of two million workers nationwide, has also joined the fray making it clear that the tariff increase had not been industrially sensitive. The Timber Workers Union (TWU) could lay off 50,000 workers this year if the high utility tariffs were maintained whiles the Industrial and Commercial Workers Union (ICU) intends on embarking a nationwide industrial action from July 28, 2010.
It is in view of this that the AGI is calling for expeditious tariff negotiation process between the Public Utilities Regulatory Commission and its stakeholders. Obviously, prolonging the whole negotiation process would not be in the interest of all stakeholders, taking into consideration their corporate strategic plans. Already the AGI has called for the suspension of the implementation of the adjusted tariffs until the review has been completed.
One notable question here is, should industry go ahead and pay for the new tariffs (June) or maintain the old bills till negotiations are over?
There would definitely be a pile up of costs depending on how the whole negotiation process ends. It is therefore very critical that this is done with some sort of urgency. Time is very essential in this particular negotiation process.
It should be clear that AGI and other bodies are not against any form of increase but rather, the sudden high increment. AGI’s position that PURC mitigates the tariffs increase by adopting a two-step increase approach is laudable and should be considered during the negotiation process. It has become more prudent also for PURC to consider the re-instatement of the tariff mechanism that was suspended three years ago. Since November 2007 there has been no adjustment in electricity tariffs. Despite that, it is not for our industries to bear the brunt.
In fact, such a decision is industrially insensitive!

Frank Agyemang