Power generation and performance of manufacturing companies listed on the Ghana Stock Exchange

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.