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20th July, 2010
High Tariffs Will Cause Unemployment In Timber Industry
ABOUT 50,000 workers in the timber industry, particularly the sawmill sector, are likely to lose their jobs within the next few weeks if the recent increases in utility tariffs are not reviewed downwards.
“The timber companies are bent on laying off over 50,000 workers if nothing is done about the new tariffs,” said a press statement jointly issued by the Ghana Timber Millers Organisation (GTMO) and the Timber Workers Union (TWU) here at the weekend.
The statement, signed by Mr E.E.K. Acquah-Moses, Chief Executive Officer of GTMO, and Mr Joshua Ansah, General Secretary of TWU, urged the government to reconsider the PURC’s tariff increases because “we are convinced that they will kill industrial growth and not create the congenial environment for industry to thrive”.
It noted that the PURC had increased electricity by nearly 200 per cent (special load tariff – medium voltage, thus pushing the energy charge for the category from GH¢9.05 per kWh to GH¢27 per kWh, meaning that companies which hitherto paid GH¢100,000 were now to pay nearly GH¢300,000.
“The timber industry, which is the country’s only renewable natural resource industry, is currently on the brink of collapse having suffered sharp increases in its major cost drivers over the past eight year,” it said.
The two organizations traced the decline of the industry and said “the bane of the industry started with the introduction of the National Reconstruction Levy in 2001, which dealt a big blow to the industry as the levy was charged on the gross revenue of the timber companies instead of their profits, adding that the monumental impact of the levy caused a major depression in the industry with most timber firms forced to fold up.
“In fact, more than 70 per cent of the timber firms which were in operation about five years ago, no longer exist, while the remaining few also heading for a downward spiral if the government does not intervene for the PURC to review the utility tariff increases downward”, the statement said.
The statement, argued that “since Ghana contributes a meager one per cent of tropical timber to the international market, it would be impossible to pass on increases in local costs to that market, with the only option being a total shut down or collapse of the companies because they cannot continue to incur losses”.
It noted that though the government statistics had pointed to improvement in macro-economic indicators, they had not translated into enhancing conditions in the business environment.
“Bank lending rates are still very high and prohibitive, Industry is borrowing above 30% interest, resulting in low investment which has, in turn, affected value-addition and application of high technology required to promote efficiency and productivity”.
It urged the government to persuade the banks to reduce their interest rates and make conscious efforts to grow the private sector by adopting policies and interventions that would enable industry to expand, re-invest profits and pay taxes to the state for the provision of public amenities.
“The timber companies are bent on laying off over 50,000 workers if nothing is done about the new tariffs,” said a press statement jointly issued by the Ghana Timber Millers Organisation (GTMO) and the Timber Workers Union (TWU) here at the weekend.
The statement, signed by Mr E.E.K. Acquah-Moses, Chief Executive Officer of GTMO, and Mr Joshua Ansah, General Secretary of TWU, urged the government to reconsider the PURC’s tariff increases because “we are convinced that they will kill industrial growth and not create the congenial environment for industry to thrive”.
It noted that the PURC had increased electricity by nearly 200 per cent (special load tariff – medium voltage, thus pushing the energy charge for the category from GH¢9.05 per kWh to GH¢27 per kWh, meaning that companies which hitherto paid GH¢100,000 were now to pay nearly GH¢300,000.
“The timber industry, which is the country’s only renewable natural resource industry, is currently on the brink of collapse having suffered sharp increases in its major cost drivers over the past eight year,” it said.
The two organizations traced the decline of the industry and said “the bane of the industry started with the introduction of the National Reconstruction Levy in 2001, which dealt a big blow to the industry as the levy was charged on the gross revenue of the timber companies instead of their profits, adding that the monumental impact of the levy caused a major depression in the industry with most timber firms forced to fold up.
“In fact, more than 70 per cent of the timber firms which were in operation about five years ago, no longer exist, while the remaining few also heading for a downward spiral if the government does not intervene for the PURC to review the utility tariff increases downward”, the statement said.
The statement, argued that “since Ghana contributes a meager one per cent of tropical timber to the international market, it would be impossible to pass on increases in local costs to that market, with the only option being a total shut down or collapse of the companies because they cannot continue to incur losses”.
It noted that though the government statistics had pointed to improvement in macro-economic indicators, they had not translated into enhancing conditions in the business environment.
“Bank lending rates are still very high and prohibitive, Industry is borrowing above 30% interest, resulting in low investment which has, in turn, affected value-addition and application of high technology required to promote efficiency and productivity”.
It urged the government to persuade the banks to reduce their interest rates and make conscious efforts to grow the private sector by adopting policies and interventions that would enable industry to expand, re-invest profits and pay taxes to the state for the provision of public amenities.
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