Free 3 months electricity to cost about 1 billion Cedis– Energy Minister

Free 3 months electricity to cost about 1 billion Cedis– Energy Minister

Energy Minister - John Peter Amewu

Energy Minister, Mr John Peter Amewu has said the free and discounted electricity provided to Ghanaians for three months (April, May and June) will cost the government a cumulative amount of about Ghc 1 billion Cedis.

“Ladies and gentlemen, overall, the government is providing a cumulative relief of an amount equivalent to about 1 billion Ghana Cedis approximately, covering a customer population of about 4.8 million metres across Ghana for the 3-month period commencing April, May and June 2020,” the energy minister said.

Mr Peter Amewu made this known while giving a breakdown of how distribution would be offered to customers for both free and 50 per cent discount as directed by President Nana Akufo-Addo.

Speaking at the press briefing on Thursday, April 16, 2020, the Energy Minister disclosed that, the move by the government to absorb bills of lifeline customers and a 50 per cent discount bills of residential, commercial and industrial customers will apply to customers of the Electricity Company of Ghana (ECG), Volta River Authority and the Northern Electricity Distribution Company (NEDCo).

The Breakdown

According to Mr Peter Amewu, the consumption of between 0 - 50 kilowatt-hours is defined by the Public Utility Regulatory Commission (PURC) as a lifeline consumption which is subsidised to ensure access and use of electricity by low-income customers.

“A lifeline customer in Ghana, for instance, can use one TV set, 2 lighting bulbs points, a tabletop fridge and a fan for a limited number of hours. So any consumer that have these appliances using on a daily basis can be considered as a lifeline customer.”

“The COVID-19 presidential relief will positively affect customers directly depending on their customer classification or consumption levels.”

The lifeline customer

The ECG lifetime customer population in Ghana currently is about 1 million metres.

“By the customer population, we're talking about the number of metres but not the population of people so we're talking about 1 million metres. In some households, we can have between 5 - 10 people using one metre. So, you can average the number of people we're talking about,” the Energy Minster specified.

The access rate today in Ghana is about 86,87 per cent which means about 86 to 87 per cent of the Ghanaian population have access to the national grid. So this directive by the President means that about 86 - 87 per cent of Ghanaians would enjoy this access.

Electricity Company of Ghana (ECG)

The customer population of 1 million of ECG is about 27.4 per cent of the ECG total customer population. This means that at a current level, the government is absorbing almost an amount of 8.5 million Ghana Cedis per month.

For none lifeline customers, of which 2,780,886 are residential and 1,608 are special low tariff customers, 50 per cent of their electricity bill will be translated into 235.4 million Ghana Cedis per month.

The total relief for ECG customers per month based on the estimated revenue is, therefore, 244 million Ghana cedis, translating into 732 million ghana cedis for the three months commencing April through to June.

NEDCo

For NEDCo, total government relief for all customers is about 47 million Ghana Cedis per month or 141 million for the 3 months.

This comprises reliefs of about 10.9 million per month or 32.9 million Ghana cedis for 3 months for a customer population of 569.000 life customers.

A percentage representing 60.67 of the total NEDCo customers.

And 36 million per month or 108 million for 3 months for 369,000 none life customers.

Volta River Authority (VRA)

For VRA, the total government relief is equivalent to 55.5 million Ghana Cedis per month or a total of 166.4 million for 3 months.

Therefore, the relief of VRA comprises the following:

  1. 12 mining customers at 42.4 million per month or a total of 127.2 million for the 3 months.
  2. VALCO, 4.8 million per month or a total of 14.4 million for the 3 months.
  3. Other manufacturing customers such as Alluet, Diamond Cement Limited, Savannah Cement Limited, Enclave Power Limited of which 7.9 million Ghana Cedis per month or a total of 23.7 million for the 3 months.

The concerns and estimation of cost of electricity subsidy by the energy think tanks

Meanwhile, ACEP has estimated that about GHS3 billion will be spent by the government following the cut in electricity tariff constituting about GHS2.7 billion in tariff and about GHS300 million in Value Added Tax, VAT.

Figures from ACEP and IES not accurate

But Information Minister, Kojo Oppong Nkrumah has dismissed figures put out by energy think tanks, Africa Centre for Energy Policy, ACEP and the Institute of Energy Security, IES regarding the cost of the electricity subsidy as announced by President Akufo-Addo in the wake of the COVID-19 outbreak.

In an interview on Wednesday, April 15, Mr. Oppong Nkrumah termed the figures by ACEP and IES as “not accurate”.

“We very much respect the work that CSOs like ACEP and IES are doing. The figures I have seen are not the figures they are putting out, theirs are way high. Their figures are not accurate,” he said.