Citi News Explainer | Mahama’s electricity exemption – who benefits, how and why

The Office of the President and four strategic ministries – Health, Education, Defence and the Interior have been granted electricity exemptions.

These institutions will no longer pay monthly electricity bills at selected operational zones and that’s support from government to ensure uninterrupted power supply to critical national institutions.

The rationale is to prevent utility-related disruptions and ease fiscal strain on institutions delivering frontline services and this is a directive approved by Cabinet.

Who pays? 

The cost will be absorbed by the government through existing allocations under the Finance Ministry’s “goods and services” budget lines.

The Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) have both been directed to implement the measure at designated critical sites.

What are the specifics?

The exemptions apply exclusively to –

1. Core presidential offices and installations.
2. Lecture halls, designated learning areas, medical and research labs and designated computer and science labs in public schools approved by the Education and Finance Ministries.
3. Operating theatres, consulting rooms, wards, blood banks, pharmacies, medical labs, vaccine storage facilities and other critical loads within Ministry of Health-designated facilities.
4. Military intelligence hubs, secured communications centres and high-level command facilities under the Ministry of Defence.
5. Emergency monitoring and response centres within the police and national security services.

Are there exclusions?

Yes there are. Non-essential facilities such as dormitories, bungalows, dining halls,  hostels, assembly halls, craft and trade workshops and recreational centres are not covered. Other exclusions are installations designated non-emergency and non-strategic. These areas remain fully liable for power costs to ensure continuity and efficiency of the exemption.

Any risks? 

This raises concerns about potential fiscal pressures, energy-sector sustainability and equitable burden-sharing in an already stretched public budget and IMF backed programme. ECG and NEDCO are already grappling with cash flow issues.

Therefore, diverting billing from major institutions to the national budget could exacerbate revenue shortfalls in the energy sector which has been said to be under threat.

Government’s mitigation

The implementation and monitoring of this exemption can be challenging and make the exemption counter-productive.

But how does the government intend to offset the anticipated revenue squeeze? It has instructed both ECG and NEDCO to intensify collection efforts from non-exempt customers including an aggressive disconnection campaign when necessary.