Vice President Mahama receiving a petition from Mr. Rajan Vinod of Special Steels Ltd.
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25th September, 2010
Steel Millers Protest Tariff Hikes
The Steel Millers Association of Ghana has asked the government to urgently intervene to save the industry from imminent collapse, following recent tariff increases by the Public Utilities and Regulatory Commission, which they say is affecting production.
"The industry is on the brink of a shut down by the end of the month if any intervention is not made," they said, adding, "about 3,000 workers may be forced to compulsorily retired.
While the association was not opposed to any increases in tariffs, it was of the view that the increases should be such that "we can keep the mills running."
The association raised the concerns at a meeting with Vice-President John Mahama at the Castle, Osu in Accra, yesterday.
They comprised of the Special Steels Limited, Tema Steel Company Limited, Western Steel and Forgings Limited, and Ferro-Fabrik Company Limited.
Nana Ato Dadzie, a former Chief of Staff in the Rawlings administration who spoke on behalf of the association, said steel represents the backbone of the development of a country and constituted about 55 per cent of the total revenue of the Electricity Company of Ghana.
He said about 40 per cent of the production cost of the steel industry was in the nature of energy. It was in that light that a little shift in the price of energy affects the mills considerably.
"Our case should be looked at separately [by the PURC] since steel mills constitute about 55 per cent of the revenue of ECG, and where we are perched is too high," he stressed.
He said the industry face stiff competition from the importation of wire cords which, he said, cost lower (five per cent) while the tariff on the local products was about 10 to 20 per cent, thus encouraging the importation of wire cords.
To protect the steel industry, he suggested that the government should follow what pertained in countries like Nigeria by placing high import duties on the importation of scrap metals to encourage local production and patronage.
Vice-President Mahama urged the association to put their petition in a written form to enable him to forward it to the advisers on energy to see the parameters within which the petition would be addressed.
While appreciating the difficulties, those in the industry were facing in view of the tariff increases, he pointed out that the government would not want to set a precedent whereby after the PURC had come up with its tariffs, government proposes another.
Since 2007, he said, the working capital of the utilities had been reduced due to their inability to purchase light crude oil, which put them in a precarious situation. He said the increases were to avoid jeopardising the ability of the utilities to provide reliable services.
Vice-President Mahama said the cost of the utilities, would, in the short to medium term, come down if the country have access to more gas from the West African Power Project.
"The industry is on the brink of a shut down by the end of the month if any intervention is not made," they said, adding, "about 3,000 workers may be forced to compulsorily retired.
While the association was not opposed to any increases in tariffs, it was of the view that the increases should be such that "we can keep the mills running."
The association raised the concerns at a meeting with Vice-President John Mahama at the Castle, Osu in Accra, yesterday.
They comprised of the Special Steels Limited, Tema Steel Company Limited, Western Steel and Forgings Limited, and Ferro-Fabrik Company Limited.
Nana Ato Dadzie, a former Chief of Staff in the Rawlings administration who spoke on behalf of the association, said steel represents the backbone of the development of a country and constituted about 55 per cent of the total revenue of the Electricity Company of Ghana.
He said about 40 per cent of the production cost of the steel industry was in the nature of energy. It was in that light that a little shift in the price of energy affects the mills considerably.
"Our case should be looked at separately [by the PURC] since steel mills constitute about 55 per cent of the revenue of ECG, and where we are perched is too high," he stressed.
He said the industry face stiff competition from the importation of wire cords which, he said, cost lower (five per cent) while the tariff on the local products was about 10 to 20 per cent, thus encouraging the importation of wire cords.
To protect the steel industry, he suggested that the government should follow what pertained in countries like Nigeria by placing high import duties on the importation of scrap metals to encourage local production and patronage.
Vice-President Mahama urged the association to put their petition in a written form to enable him to forward it to the advisers on energy to see the parameters within which the petition would be addressed.
While appreciating the difficulties, those in the industry were facing in view of the tariff increases, he pointed out that the government would not want to set a precedent whereby after the PURC had come up with its tariffs, government proposes another.
Since 2007, he said, the working capital of the utilities had been reduced due to their inability to purchase light crude oil, which put them in a precarious situation. He said the increases were to avoid jeopardising the ability of the utilities to provide reliable services.
Vice-President Mahama said the cost of the utilities, would, in the short to medium term, come down if the country have access to more gas from the West African Power Project.
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