COVID-19: Ghanaian government to spend GHC1billion on Energy Relief Package

The Ghanaian government is expected to cumulatively spend GHC1 billion ($172,413,790) to absorb the electricity bills of Ghanaians for three months (April, May, and June) as part of measures to relieve customers of some financial burden due to the COVID-19 pandemic.

Minister for Energy John Peter Amewu

Speaking at a press conference on Thursday (April 16, 2020), Energy Minister, John Peter Amewu said the package will cover over 86% of individual consumers and industries on the national grid.

He explained that the said amount will cover the electricity bills of consumers of the Electricity Company of Ghana (ECG), the Volta River Authority (VRA) and the Northern Electricity Distribution Company (NEDCo).

His explanation was coming days after President Akufo-Addo announced that as part of measures to mitigate the economic impact of the coronavirus on Ghanaians, the government would absorb the electricity bills of lifeline consumers and 50 percent for all other consumers using March 2020 bill as the benchmark.

Giving further details, Mr Amewu said “In Ghana, consumption of 0-50kWh is defined by PURC as the lifeline consumption, which is subsidized to ensure access and use of electricity by low-income customers. A lifeline customer can use one TV set, two lighting bulbs, a table top fridge and fan for a limited number of hours.”

“The COVID-19 presidential relief will positively affect customers differently depending on their customer classification or consumption level,” he added.

He said that ECG caters for 1 million cluster population. This covers about 27.4% of the total customers of ECG.

A cluster population is “the number of meters and not the population of people,” he explained.

“This means that at the current tariff level, government would absorb an estimated amount of GHC 8.5 million per month for [life line customers]. For non-life customers, a 50 percent discount on their electricity bills would translate to GH₵235.4 million for 278, 086 residential customers and 160,008 for special load tariff customers,”

“A total relief for ECG customers per month based on the estimated revenue would be GH₵244 million per month translating to GH₵732million for the months of April, May, and June,” he added.

Mr Amewu further stated that for the Northern Electricity Distribution Company (NEDCo) “the total government relief for all customers was about GHC47 million per month or GHC 141 million for the three months.”

He said the reliefs covered about GHC10.9 million per month or GHC32.9 million for three months for a customer population of 569,000 life customers.

The Minister said for non-life customers, the figure was about GHS36 million per month or GHS108 million for three months for 369,000 non-life customers.

For the Volta River Authority (VRA), Mr Amewu said the government would spend a total relief equivalent to GHC5.5 million per month or GHC166.4 million for 3 months.

He added that for VRA’s Consumers which includes 12 mining companies, VALCO and other manufacturing customers such as Aluworks, Diamond Cement Limited, Savannah Cement Limited and Enclave Power Limited, the government would spend an estimated GHC42.4 million per month or GHS127.2 million for the three months.

It is estimated that the government will spend GHC4.8 million per month or GHC14.4 million in total for the next three months on VALCO alone.

Meanwhile, the other manufacturing companies would cost GHC7.9 million per month or a total of GHC53.7 million for the three-months period.

However, the Africa Centre for Energy Policy, (ACEP), has said that the government’s introduction of a complete waiver will, “endanger the sustainability of the power sector now and after the COVID-19 pandemic.”

In a statement, the Executive Director, Benjamin Boakye, said, “this policy is well-intentioned to support Ghanaians, particularly the poor and vulnerable, who are faced with significant socioeconomic risks, resulting in part, from their reliance on daily wages and loss of economic livelihood. ACEP is of the considered view that not everybody captured in the subsidy needs it. Rather, the measure further endangers the sustainability of the power sector now and in post-COVID-19.”

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