Abstract:
Manufacturing companies employ electricity as a key resource input in
their production mix. This has generally led to a situation where
manufacturing companies subsist heavily on electricity for survival and
continuity in business. Against this backdrop, the objective of this study was
to examine the effect of power generation on the performance of
manufacturing companies listed on the Ghana Stock Exchange.
A sample of seven firms was selected for the study using convenience
sampling technique. Panel data covering the period 2008-2012 was adapted
from the published financial statements of sampled firms. Data on power
generation were time series data adapted from the Ghana Energy Commission
spanning between the period 2008 and 2012. Multiple linear regression
models were used to estimate the relationship between the variables in the
study. The results of the study suggest that electricity supply has a significant
positive impact on both profitability and efficiency. The effect of System
Average Interruption Duration Indexon both profitability and efficiency were
found to be negative. However, System Average Interruption Frequency
Indexwas found to have an insignificant effect on both profitability and
efficiency.
In respect of this, energy ministry should initiate prudent measures to
improve electricity supply to ensure efficiency and profitability of
manufacturing companies.In addition, manufacturing companies are to invest
in other energy efficient technologies to ensure continuous electricity supply
in the event of erratic supply of electricity from the national grid.
