News Guide Africa

Tag: Ghana Water Company

  • New utility tariffs to take effect Sept 1

    New utility tariffs to take effect Sept 1

    Adnan Adams Mohammed

    Effective September 1, 2022, Ghanaians would be paying the approved adjusted tariffs for all electricity and water usage.

    According sources at the Public Utilities Regulatory Commission (PURC),the nationwide consultations on proposals it received from the utility companies, Electricity Company of Ghana (ECG) and Ghana Water Company Limited (GWCL) and others, was wrapping up to announce new tariffs this week.

    The PURC stakeholders’ consultation team reveals that, aside from the public a across the 16 regions, the PURC also engaged identifiable groups and relevant sections of the public and had considered all sides of the arguments in arriving at appropriate tariffs.

    A Daily Graphic publication last week indicated that, the new tariffs will not be across the board, which means the rates will depend on the reasons and proofs adduced by the utilities and the verification the commission has done. Also, the tariffs to be announced would exclude taxes and levies already imposed by the state.

    It said micro, small and medium enterprises (MSMEs), such as food joints and salons, would be protected from paying “punitive” tariffs.

    The utility companies presented proposals to the PURC in May this year, based on the regulator’s guidelines.

    While the Ghana Water Company Limited (GWCL) proposed a 300 per cent increment over its existing tariffs, the Electricity Company of Ghana (ECG) proposed 148 per cent, the Volta River Authority (VRA) proposed 37 per cent, with the Ghana Grid Company Ltd (GRIDCo) proposing 48 per cent.

    Other proposals were 38 per cent from the only private power distributor, Enclave Power, and 113 per cent increase over the existing tariffs of the Northern Electricity Distribution Company (NEDCo).

    The tariff proposals were in line with policy directions to progressively eliminate what has been described as “punitive tariff bands” that discouraged consumption.

    This included industry being made to pay higher to cushion residential consumers, a situation which was adding to the cost of doing business and making operations in the industrial sector costly.

    The multi-year tariff adjustment, which will come with different rates of increment over a five-year period, is also expected to enable the PURC and the utilities to commit to the quarterly “automatic” adjustment system, support industrial development and improve utility efficiency.

    Another source familiar with the consultations and computations told the Daily Graphic that in arriving at the various tariffs, the regulator took into consideration external and internal economic conditions, as well as the need to keep the utilities in operation, enabling them to do routine maintenance, finance developments, among others.

    The PURC also subjected all the costs proposed by the utilities to strict assessment and validation, including visiting some of the investments on the ground.

    It accepted servicing costs on loans for approved investments, while the state-owned utilities were asked to suspend all discretionary investment this year.

    The regulator also requested for and critically assessed proposed investments by utilities, among other things.

    Customer expectation survey The PURC also conducted a survey in which 851 respondents across all 16 regions completed the questionnaire.

    The survey indicated that 44 per cent of respondentsthought the current electricity tariffs were not commensurate with quality of service received from the electricity utilities due to frequent voltage fluctuations, poor customer service delivery, among other reasons.

    On electricity tariffs, 42 per cent of the respondents rated prevailing tariffs as fair, while 55 per cent rated them as high.

    Again, half of the respondents indicated that current water tariffs were not justified, given the poor service delivery in the form of frequent water supply interruptions. Consequently, 41 per cent of respondents rated prevailing water tariffs as fair, while 57 per cent rated them as high.

    The PURC, the source said, would also set efficiency benchmarks by which the utilities would abide, so that their inefficiencies would not be passed on to consumers.

    “The PURC sets loss benchmarks which mostly cover technical losses to ensure that the inefficiencies are not passed on. For instance, if the benchmark is 4.2 per cent and you incur 10 per cent, the PURC will deduct the benchmark and the utility will pay for the rest,”it explained. Fact sheet

    a) The utility companies are proposing new tariff adjustments mainly due to their inability to finance capital investments, inadequacy of the last PURC-approved tariffs, the depreciation of their assets, exchange rate fluctuations,payment of government-guaranteed loans, among others.

  • PURC extends announcement date of new utility tariffs by two weeks

    PURC extends announcement date of new utility tariffs by two weeks

    The Public Utilities Regulatory Commission (PURC), has set a new date for the announcement of its decision on the 2022-2027 Multi-Year Major Tariff Review.

    Last week Friday, 1st July 2022 was the initial date set for the announcement of the Commission’s decision on the review of water and electricity tariffs for 2022-2027, but, for the major interest of Ghanaians, had to extend the date to 15th July 2022.

    The Commission explained that the postponement was to allow for broadening of tariff consultation to solicit more independent views; independent verification of submitted projects (completed or work in progress) and deeper consultation with key stakeholders such as the utilities.

    “The above has led to the need for more time for further review of the tariff proposals submitted by the utility service providers, and to incorporate the findings of the regulatory audit and views of all stakeholders across the country”, a statement issued by the Commission and signed by Dr Ishmael Ackah said

    “The Commission has engaged most of its stakeholders, including the Parliamentary Select Committees on Finance; Mines and Energy; Water, Works and Housing; Development Partners; Civil Societies; Organized Labour; Industry; Media; Religious Groups; Academia, and the general public,” the statement added.

    The Commission assured all stakeholders of its commitment to ensuring a transparent, fair, and all-inclusive process in determining the multi-year tariff.

  • PURC shot-down the rate of increment proposed by ECG and GWCL

    PURC shot-down the rate of increment proposed by ECG and GWCL

    Adnan Adams Mohammed

    The Public Utilities Regulatory Commission (PURC), has indicated that utility service providers won’t get anything close to their huge tariff demands.

    This latest pronouncement is a reveler to many as the Commission is yet to complete its ongoing nationwide public hearing on the proposed tariff reviews.

    The Electricity Company of Ghana (ECG) has proposed an increment in tariffs by 148% while the Ghana Water Company Limited is asking for its tariffs to go up by 343%. This ignited a heated debate with majority of consumers opposing the proposed increment.

    “Though PURC is still considering a number of things, the utility firms will not get the huge margins they had proposed”, the Technical Committee Chairman of PURC, Ishmael Edjekumhene, has said when speaking at the Takoradi Public Hearing on the proposed tariff review for 2022-2027.

    “We are now beginning the detailed analysis of the proposals to see how prudent their (utilities) cost are to see the extent to which they’ve complied with the guidelines that we provided to them and then ultimately, once we’ve looked at all the numbers provided, we will take a decision. That decision can either go up, stay the same or come down because in 2018 the commission looked at all the numbers and was able to tell Ghanaians or tell the utilities that even though you are asking for an increment we think that the tariff should come down.”

    “So once we are satisfied with the analysis, what Ghanaians should expect is an announcement. If you go and compare the history of tariffs setting in Ghana and you compare the proposals as submitted by the utilities to what is ultimately approved, you will see that there’s a vast difference. It is not going to be a straightforward matter in the sense that we are coming to look at the numbers and what I’m certain of is that there is nowhere some of the things they are talking about are going to end up being the cost that consumers are going to pay”, he said.

    The Executive Secretary of the PURC, Dr. Ishmael Ackah also speaking at the Takoradi organized public hearing on the tariff proposals said the utility companies could have done themselves good if their service provision had been better all this while and could have helped them from the resistance by consumers to pay more.

    “47% of about 851 respondents in a survey we conducted indicated that they are willing to expect some adjustments on the condition that services will improve. So this year, in September, PURC is launching a customer service clinic so that utilities will tell customers that you can apply for a meter even if you don’t know any big man and that it will take you three days for you to get the meter even if you don’t know any honourable member. If we are able to do these things, I think it will reduce the number of PowerPoint slides you present at these forums just to make a case for the increment to consumers”, he said.

    The Public Utilities Regulatory Commission’s Takoradi Public Hearing on the proposed Tariff Review for 2022-2027 is the third after Accra and Ho in series of nationwide public hearings to enable utilities explain to consumers the rationale for their huge tariffs increment proposals.

    Meanwhile, majority of consumers who spoke at the Takoradi hearing shot down the tariff increment proposal.

  • Utility tariffs increment: Make your voices heard – Chief of Staff to stakeholders

    Chief of Staff Frema Osei-Opare has said all the stakeholders must make their voices heard in the process of announcing new utility tariffs by the Public Utilities Regulatory Commission (PURC).

    “It is my fervent hope that all stakeholders will engage actively in this review process and make their voices heard so that the final outcome will benefit the generality of all stakeholders,” she at the inauguration of an office complex for the PURC in Koforidua.

    The Head of Public Relations and External Affairs of the PURC said the Commission will also consider the interest of the investor community and the interest of the utility companies before announcing the new tariffs.

    The PURC had earlier noted that this year’s approved tariffs for utility service providers will be announced on July 1, 2022.

    According to the PURC, the tariffs could be increased or decreased.

    Dr Eric Kofi Obutey, the Director of Research at PURC made this known on Accra 100.5 FM’s evening news on Thursday, May 12, 2022.

    He said, for now, the Commission is engaging all the stakeholders to arrive at tariffs that will serve the need of Ghanaians as well as the service providers.

    Dr Obutey mentioned some of the stakeholders as the Parliamentary Select Committee on Mines and Energy; Association of Ghana Industries (AGI), and Ghana Employers Association among others.

    He explained that the stakeholder engagement before the announcement of the approved tariffs is mandated by law.

    Dr Obutey was hopeful that all the engagements will end by June for a decision to be taken by July.

    The Electricity Company of Ghana (ECG) and Ghana Water Company Limited have proposed 148 per cent and 334 per cent hikes, respectively, in tariffs.

  • Tariffs increment: will PURC consider economic hardship or face reality?

    Tariffs increment: will PURC consider economic hardship or face reality?

    Adnan Adams Mohammed

    The Public Utilities Regulatory Commission (PURC) has said this year’s approved tariffs for utility service providers will be announced on July 1, 2022.

    According to the PURC, the tariffs could be increased or decreased.  The Director of Research at PURC, Dr Eric Kofi Obutey, has said,  the Commission is engaging all the stakeholders to arrive at tariffs that will serve the need of Ghanaians as well as the service providers. The stakeholders as the Parliamentary Select Committee on Mines and Energy; Association of Ghana Industries (AGI), and Ghana Employers Association among others.

    The Electricity Company of Ghana (ECG) and Ghana Water Company Limited have proposed 148 per cent and 334 per cent hikes, respectively, in tariffs. This has triggered the anger of Ghanaians who complains that, the economy is already ‘burning the hell’ out of them, including policy analyst.

    Among the analysts who have reacted to the proposals is, Dr. Steve Manteaw. He has described the demand of increase in electricity and water tariffs as justifiable, saying, there is a strong basis for an upward adjustment, despite the inefficiencies of the utility firms. According to him, factors such as inflation and exchange rate losses justify the upward increment.

    “There is a strong basis for an upward adjustment; if you look at inflation rate, if you look at the cedi depreciation and all that. But what the companies haven’t told us is what component is made up of transmission losses and commercial losses. These are categorised us inefficiency cost”, The Executive Director of ISODEC said in an interview last week.

    “PURC has the mandate to ensure that inefficiency cost are not passed onto consumers. Of course to deal with inefficiencies, you need to make investments, but you don’t make investments from tariffs”, Dr. Manteaw expatiated.

    But, a Political Scientist and lecturer at the University of Ghana, Professor Ransford Gyampo, has questioned the proposal.

    Reacting to the proposed in a Facebook post, last week, he said: “You cannot propose an increment in utility bills across the board like that, at this time when the poor has already been hit hard.”

    He, therefore, wants “only article 71 officeholders, who have, but don’t pay, pay for such hikes,” to be made to pay the proposed increase by the utility service providers and “Leave the poor alone!”

    Apparently, a policy Think tank, Consumer Unity and Trust Society (CUTS) International, has backed the push for a review of utility tariffs by the Electricity Company of Ghana and the Ghana Water Company Limited.

    The think tank, however, maintains that there is the need to speedily address the inefficiencies within the system to make the companies sustainable.

    West Africa Regional Director for CUTS International, Appiah – Kusi Adomako, speaking in an interview explained that; “I support the principle that tariffs need to go up to make ECG able to fulfil its mandate. If ECG is deprived of increment, what it means is that ECG may not be able to invest. And we are told that most of the cables and other things are old and need replacement, or we might go back to the dumsor era. Water is also justifiable because the water company buys chemicals. These chemicals are imported into the country. Freight prices have also gone up, exchange rate has also gone up and even the cost of buying those items have also gone up between the last time tariffs were increased. So, we need to allow these firms to be able to get some increment so that the business will be sustainable. When it is sustainable, people will find them attractive to invest in,” he said.

    Furthering his argument, Dr Manteaw noted that, in normal business practices, shareholders are mandated to inject capital into the business with regard to equipment renewal and all the capital investments needed.

    “The shareholders in this case is the republic (government) and therefore we have to finance these major equipment renewal and maintenance activities from our taxes. They must be budgeted for through the budget and then in terms of the daily operations, you can actually finance through the taxes”, he added.

    He said the package given to Aqua Vitens Rand were far more and better conditioned than those given to Ghanaian entities, adding, “I do recall when we went through ECG privatization, we were prepared to do for PDS what we were not prepared to do for our Ghanaian managers”.

    For instance, he pointed out “when PDS took over, they asked that all the debts ECG had at the time were to be re-fenced. So it were not part of the account because those were legacy debts…they were not responsible. But we are not prepared to re-fenced for the old ECG”.

    “Again, a year before PDS took over, we had denied ECG tariff adjustment (upward adjustment). But when PDS took over, we gladly approved upward adjustment for PDS”, he added.

    Furthermore, Dr. Manteaw said “I tend to look at our utility companies sympathetically, a reason being that they really work under severe stress. And the conditions under which they work are not the type that any foreign multinational company will want to work under.”

    “I recall we brought in Aqua Vitens Rand, we improve water distribution in this country and by the time we abrogated – we actually refused to renew that contract – we had the phenomenon known as the Kufuor gallons. When the facility reverted to the Ghanaian manager, the gallons disappeared”, he stressed.

    Subsequently, the Ghana National Chamber of Commerce and Industry (GNCCI) says any adjustment must favour industries.

    According to the GNCCI, further increases, particularly in energy cost, will be detrimental to the private sector.

    The GNCCI notes that the PURC must consider cushioning the business community with a comparatively lower tariff that is reflected in the production capacity of manufacturing and key service sectors.

    Already, businesses are recovering from the impact of the pandemic in addition to rising cost of doing business.

    A statement issued by the GNCCI states that, “Energy is one of the critical cost components of business. While recognizing improvements in the energy situation over the last few years, energy cost to businesses remains too high (comprising up to 30% of cost of operation in some extreme cases). Businesses pay much higher energy in order to subsidize households. Whereas in many other countries, households pay higher energy cost to subsidize industry.”

    “As we move into the integrated African market zone, power tariff component of products will be a defining factor. Ethiopia and Kenya have better tariffs than Ghana; thus, making their products competitive.”

    In the proposal, ECG also wants 7.6% average adjustments between the periods of 2023 to 2026.

    The GWCL argues that while the average tariff per cubic metre in 2019 was 1.27 USD, it was reduced to USD 1.13 as a result of cedi depreciation.

    For the GWCL, the current domestic tariff of GHS3.29 per cubic metre to consumers within 0-5 cubic metres is less than what the poor in rural areas pay, which is about 10 cedis. The water company thus wants a 334% tariff hike.

    Considering the concerns and facing reality of the economic conditions at the a time inflation at reached all time highest in over 18 years to record 23.67 percent: Will the PURC consider the reality and dishonour or cut down the rate of increase being demanded by the utilities service providers, thus, ECG and GWCL; or it will consider the financial distress of the utility companies and give them what is due them to sustain their smooth operation?

    Ghanaians, ECG and GWCL are all now at the mercy of PURC decision to be announced on July 1.

  • Analysts react to ECG/GWCL tariffs adjustment proposal

    Analysts react to ECG/GWCL tariffs adjustment proposal

    Adnan Adams Mohammed

    Some policy analysts have reacted to the proposal from the utility service providers for the Public Utilities Regulatory Committee (PURC) to increase tariffs.

    The Electricity Company of Ghana and Ghana Water Company Limited have proposed an astronomic increase in tariffs for the year 2022.  ECG is demanding a 148% increase in electricity tariff, whilst the Ghana Water Company Limited wants 334%.

    This has ignited a heated debated among Ghanaians including experts. Among the analysts who have reacted to the proposals is, Dr. Steve Manteaw. He has described the demand of increase in electricity and water tariffs as justifiable, saying, there is a strong basis for an upward adjustment, despite the inefficiencies of the utility firms. According to him, factors such as inflation and exchange rate losses justify the upward increment.

    “There is a strong basis for an upward adjustment; if you look at inflation rate, if you look at the cedi depreciation and all that. But what the companies haven’t told us is what component is made up of transmission losses and commercial losses. These are categorised us inefficiency cost”, The Executive Director of ISODEC said in an interview last week.

    “PURC has the mandate to ensure that inefficiency cost are not passed onto consumers. Of course to deal with inefficiencies, you need to make investments, but you don’t make investments from tariffs”, Dr. Manteaw expatiated.

    But, a Political Scientist and lecturer at the University of Ghana, Professor Ransford Gyampo, has questioned the proposal.

    Reacting to the proposed in a Facebook post, last week, he said: “You cannot propose an increment in utility bills across the board like that, at this time when the poor has already been hit hard.”

    He, therefore, wants “only article 71 officeholders, who have, but don’t pay, pay for such hikes,” to be made to pay the proposed increase by the utility service providers and “Leave the poor alone!”

    Apparently, a policy Think tank, Consumer Unity and Trust Society (CUTS) International, has backed the push for a review of utility tariffs by the Electricity Company of Ghana and the Ghana Water Company Limited.

    The think tank, however, maintains that there is the need to speedily address the inefficiencies within the system to make the companies sustainable.

    West Africa Regional Director for CUTS International, Appiah – Kusi Adomako, speaking in an interview explained that; “I support the principle that tariffs need to go up to make ECG able to fulfil its mandate. If ECG is deprived of increment, what it means is that ECG may not be able to invest. And we are told that most of the cables and other things are old and need replacement, or we might go back to the dumsor era. Water is also justifiable because the water company buys chemicals. These chemicals are imported into the country. Freight prices have also gone up, exchange rate has also gone up and even the cost of buying those items have also gone up between the last time tariffs were increased. So, we need to allow these firms to be able to get some increment so that the business will be sustainable. When it is sustainable, people will find them attractive to invest in,” he said.

    Furthering his argument, Dr Manteaw noted that, in normal business practices, shareholders are mandated to inject capital into the business with regard to equipment renewal and all the capital investments needed.

    “The shareholders in this case is the republic (government) and therefore we have to finance these major equipment renewal and maintenance activities from our taxes. They must be budgeted for through the budget and then in terms of the daily operations, you can actually finance through the taxes”, he added.

    He said the package given to Aqua Vitens Rand were far more and better conditioned than those given to Ghanaian entities, adding, “I do recall when we went through ECG privatization, we were prepared to do for PDS what we were not prepared to do for our Ghanaian managers”.

    For instance, he pointed out “when PDS took over, they asked that all the debts ECG had at the time were to be re-fenced. So it were not part of the account because those were legacy debts…they were not responsible. But we are not prepared to re-fenced for the old ECG”.

    “Again, a year before PDS took over, we had denied ECG tariff adjustment (upward adjustment). But when PDS took over, we gladly approved upward adjustment for PDS”, he added.

    Furthermore, Dr. Manteaw said “I tend to look at our utility companies sympathetically, a reason being that they really work under severe stress. And the conditions under which they work are not the type that any foreign multinational company will want to work under.”

    “I recall we brought in Aqua Vitens Rand, we improve water distribution in this country and by the time we abrogated – we actually refused to renew that contract – we had the phenomenon known as the Kufuor gallons. When the facility reverted to the Ghanaian manager, the gallons disappeared”, he stressed.

    In the proposal, ECG also wants 7.6% average adjustments between the periods of 2023 to 2026.

    The GWCL argues that while the average tariff per cubic metre in 2019 was 1.27 USD, it was reduced to USD 1.13 as a result of cedi depreciation.

    For the GWCL, the current domestic tariff of GHS3.29 per cubic metre to consumers within 0-5 cubic metres is less than what the poor in rural areas pay, which is about 10 cedis.

    The water company thus wants a 334% tariff hike.