The head of the Kumasi Institute of Technology and Environment is questioning the prudence and the sustainability of the electricity tariff reduction announced by the Finance Minister in Wednesday’s budget presentation.

Mr Ishmael Agyekumhene found it curious that a government that recently launched a bond to clear legacy debt in the energy sector will be giving electricity tariff freebies.

He told Joy News the reduction announcement by the Finance Minister may just be to fulfill a campaign promise but that would have dire consequences on the country’s energy debt profile, something the country would have to pay later.

Mr Ken Ofori-Atta on Wednesday announced a number of tariff cuts in electricity which will take effect in 2018, pending approval by the Public Utility Regulatory Commission (PURC).

If the recommendation is approved by the PURC, residential users will experience 13% reduction in tariff next year.

Those in the non-residential category will also see a 13 percent reduction. The commercial and industrial consumers -special load tariff (medium voltage), special load tariff (high voltage) and high voltage mines- are to see between 14 to 21% reduction in prices.

According to the Finance Minister, they have introduced a new pricing formula which they will discuss with the PURC for possible adoption in 2018.

Even before the policy is implemented the Kumasi Institute of Technology and Environment is asking what the implication of these reductions will have on the country’s economy.

“I know the sector has a lot of challenges. My only concern is that, is it really free? Is it going to be a reduction or it has implication? We just launched a bond to clear the energy sector debt and these are some of the reasons that have contributed to the debt stock.

“Is it that we are super efficient now and able to produce cheaply,” Mr Ishmael Agyekumhene asked.

He said if the reduction is another subsidy then it will be worrying.

However, a deputy Energy Minister, Dr Mohammed Amin Adam has defended the price reduction policy

He told Joy News that government considered two factors before going ahead to implement the price reduction policy.

“The first way is by reducing the cost of generation of electricity and the second way is by issuing a new tariff policy,” he said.

He added the decision to depend on gas has largely reduced the cost of production of electricity and that should reflect in the pricing policy.