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Energy Cost in Ghana Gov’t to push cost of energy subsidies on high consumers

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Seth Terkper, Finance Minister play

Seth Terkper, Finance Minister

High consumers of electricity would be made to pay for the newly approved subsidies on the cost of energy, according to the Finance Minister Seth Terkper.

The announcement made by the ECG earlier this month meant that all consumers of power would now pay 34 pesewas per unit for the first 50 units of power consumed instead of the 67 pesewas per unit previously charged.

While the move has attracted commendation from the general public, economists have kicked against it describing it as a populist move geared towards winning votes in the December General Elections.

.Again, they argue the introduction of subsidies is contrary to the arrangements made with the IMF under which government is expected to curtail spending by removing subsidies.

There is also scepticism over the strategy government has in place to finance the subsidy, especially when government has failed to pay fuel subsidies in the past, posing huge financial constraints on players of the sector.

READ MORE: Ghana Budget 2016 Government to seize dormant pensions and insurance accounts

Reacting to questions about plans government has in place to effectively pay for the subsidies, Finance Minister Seth Terkper said “For the high consumers they may be paying high tariffs such that it helps pay for the subsidies of the low consumers. This is progressive – this is a principle that says that if you earn more, you contribute more to society. So the correction was made by ECG”.

"Obviously ECG was collecting monies from those who should not be paying after having consumed more than their first 50 units. And that has been corrected. Of course there’s a cost to this but the automatic tariff adjustment could neutralize it,” he added.

Mr. Terkper was speaking to a group of journalists in Accra after he delivered the Mid-Year Budget Review to parliament.

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