Over 95 per cent of businesses in Ghana say high electricity and water tariffs and multiplicity of taxes are negatively impacting of on their operations, the Association of Ghana Industries (AGI) has revealed.
According to the AGI, “even though multiplicity of taxes and the high cost of utility cut across all sectors, the Manufacturing and Services sectors were hardest hit.”
Contacts made by this paper with some players in the services industry revealed outrageous electricity tariffs.
For instance four-star hotels which paid an average of GH¢99,000.00for electricity bills for one month in 2015 now pay about GH¢199,250.93 for one month in 2016.
One particular rated hotel which for the whole of 2015 paid GH¢1.54milion as electricity bill had to cough up GH¢1.03 million for only four months (January to April) this year.
Some steel manufacturers say the imposition of new electricity tariffs is eating away their profits.
According to them, “with the current electricity tariff of 71.65 pesewas per kilowatt hour, and additional demand charges of GH¢50.960 per 1,000 volt amps, the cost of production will be GH¢2,486 per tonne.
The Steel Manufacturers Association of Ghana (SMAG) maintain that it would be impossible for steel mills to remain in business under the present regime of high electricity tariffs, rising cost of raw materials, labour and financing costs among others.
The AGI stresses that “the high cost of utilities and other bottlenecks have consistently taken a heavy toll on the fortunes of local manufacturers.”
A statement issued together with the publication of the Business Barometer report said the high cost of utility tariffs continues to render businesses, particularly industry uncompetitive, adding that the current structure where Industry subsidizes residential consumers erodes competitiveness of Industry.
The Association noted that the energy sector levies embedded in utility tariff increments came as a surprise, adding that "this indicts the transparency in tariff fixing. It is important to re-examine the current utility pricing and tax regime, if Government is to chart a competitive path for businesses."
“The Association finds it not surprising that the manufacturing sub-sector’s contribution to GDP is not growing as expected,” it said.
"Contractors are still owed monies for projects completed. Unfortunately, the payments of interest on monies in arrears suffer further delays of about close to a year," the report lamented.
The AGI reiterated its call on the Public Utilities Regulatory Commission (PURC) to re-classify consumer categories and review the current electricity tariff structure, so as not to disadvantage industry.
Businesses in the country have for the past two years been lamenting what they describe as teething challenges which continue to negatively impact on their operations and profitability.
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