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Tariffs increment: stakeholders challenge PURC amidst economic hardship

Adnan Adams Mohammed

The Public Utilities Regulatory Commission (PURC) has justified the upwards review of utility tariffs.

PURC’s justification comes in the midst of stiff opposition from major stakeholders and the citizenry. The Commission, last week announced a 27.15% increase in tariff for electricity and 21.55% increase in water tariff effective September 1, 2022.

Business owners and ordinary citizens have all agitated against the upward adjustment at the time that economic hardship is biting everyone in the country.  Describing the situation as harsh, the Chief Executive of the Ghana National Chamber of Commerce and Industry (GNCCI) pointed out in an interview that, businesses were expecting moves that will reassure them—not a further increase in their cost of production.

“If we continue increasing the cost of production for businesses, it will get to a time they will fold up and ask their workers to go home. The unemployment rate will get worse”, Mark Badu-Aboagye worriedly said.

Mr. Badu-Aboagye argued that with the current situation of Ghana’s macro-economic indicators, government is expected to be sensitive to businesses.

“There is a likelihood that a lot of businesses are going to run at a loss. Businesses are expecting policies that would rather bring some relief as inflation and interest rates go up. The tariff increment is going to raise the cost of production in the country”, he said.

Providing some recommendations, Mr. Badu-Aboagye appealed to government to engage businesses regularly to understand the current challenges faced by the private sector.

Earlier this, the utility companies including the Electricity Company of Ghana and Ghana Water Company Limited proposed an increase in tariffs by 148% and 334% respectively. The PURC had to do a nationwide stakeholders consultation before arriving at the current decision.

Meanwhile, the Director of Regional Operations at the Public Utilities Regulatory Commission (PURC), Alhaji Abukari Jabaru has explained that, every tariff has a control period and the last control period of the commission had expired.

“The last tariff had a two-year control period but had expired and because it had expired they [utility companies] were obliged to submit a proposal based on the guidelines that were submitted to them”.

“Originally they [utility companies] submitted a five-year tariff control proposal but had to go on with the three-year plan,” he said.

Apparently, the Chamber of Independent Power Producers (IPPs), Distributors and Bulk Consumers have challenged the Public Utilities Regulatory Commission (PURC) to ensure that consumers get value for money from the power consumed, but not pay for the inefficiencies of the Electricity Company of Ghana (ECG).

The Chief Executive of the Chamber, Elikplim Komla Apertorgbor, in an interview to ascertain his reaction to tariffs increment said, ECG must live up to expectations and settle all its indebtedness to the key stakeholders within the electricity value chain.

“I will like to challenge the regulator, the PURC to ensure consumers get real value for their money and not pay for ECG’s inefficiencies. Enough of commercial and technical loses, enough of these stories”.

He mentioned that “let them up their game and provide us the best of service. I must commend PURC again and for the resolve to lower tariffs for the small and medium scale industries. On a first side, it is a great push and support for the local industries to thrive well in the competitive space.

“In the midst of unimaginable economic conditions, the tariff adjustment has become inevitable especially when the underlying price determinants are out of control. The most important thing is for ECG to make the required revenue and settle the key stakeholders in the electricity supply value chain.

“It will interest you to know that ECG as of the end of July this year has accumulated up to $908 million to the IPPs alone. So, it is important to make the required revenue to settle this debt”, Mr. Apertorgbor pointed out.

Consequently, the Minority in Parliament in a statement signed and released last week by Ranking Member on Parliament’s Mines and Energy Committee, John Jinapor, intuited that the increase in utility tariffs by the Public Utilities Regulatory Commission (PURC) will only exacerbate the current high cost of living.

According to Mr. Jinapor, the increase will also “worsen the plight of the already impoverished Ghanaian.”

“Prior to the electricity tariff increments, petroleum products at the pumps have witnessed a colossal increment of about 100%. So far the Energy Debt Recovery Levy has seen an increase of 20%; the Price Stabilization and Recovery Levy is up by 40%.

“The Unified Petroleum Pricing Formula has been increased by 164%, whilst the BOST margin has been increased from three pesewas to nine pesewas representing a 200% increase. As if this is not enough, the fuel marking margin levy has also been increased by another 233%.

This is against the background that the volume of petroleum products consumed has increased by 35% from 4 billion litres to 5.5 billion litres.”

In this regard, he stated that “We are of the strongest conviction that Government can and must do something to cushion Ghanaians who are going through unimaginable hardships with ever-worsening poverty levels under the Akufo-Addo/Bawumia-led government.”

Mr Jinapor further clarified that the 27 per cent increase in electricity does not apply to every consumer.

“A critical look at the tariff structure as announced reveals that all residential consumers who fall between 0-300 kWh bracket have witnessed a price increase from GHp/kWh 65.4161 to GHp/kWh89.0422, representing an increment of almost 34%.

“It should be noted that the bulk of residential consumers fall within the 0-300 kWh bracket and will therefore be adversely affected by the 34% adjustment,” he stated.

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