Consumers of electricity and water will pay more tariffs from December 14, 2015. This follows the upward review of electricity and water by 59.2 per cent and 67.2 per cent respectively by the Public Utilities Regulatory Commission (PURC).
The figure, which fell short of the 126 per cent demanded by the electricity providers and 400 per cent, requested by the Ghana Water Company Limited (GWCL), was below the 2014 upward adjustment, which saw electricity tariffs increased by 78.9 per cent.
The increments, according to officials of the PURC, were to enable the utility providers to have a clean balance sheet to borrow from the financial market without recourse to the government to finance their operations.
The Director of Public Relations and External Affairs at the PURC, Nana Yaa Jantuah, who announced the percentage increases at a press conference in Accra yesterday, indicated that the minimal percentage increase in tariffs over the last couple of years had eroded the financial strength of the utility providers and subsequently saddled them with huge debts.
She described the percentage increases as meant to put the providers on their feet, considering that their services had not been to expectation.
“We would have gone the whole hog and accepted their proposed percentage increases. However, the power rationing factor made the Commission take a decision to maintain a minimal rate, while we await the kind of improvement that would come, before we can consider any further upward increases.
“The new reflective tariffs would give them a clean balance sheet to enable them to raise enough money for crude oil purchases for their operations”, Ms Jantuah said.
She indicated that the PURC, in arriving at the decision, considered consumer and investor interests, generation and fuel mix, growth in demand and power purchase cost for independent producers, among other factors.
“The adjustments were also largely driven by a shift in the generation mix which has seen the hydro generation sources depleting to about 27 per cent in 2015 from 58 per cent hydro in 2013. The country’s total thermal generation now stands at about 73 per cent, thus making the venture to become very expensive.
“It must be noted that the concerns of consumers and key stakeholders played a pivotal role in the commission’s deliberations before the final approval decision was made”, she said.
She stressed that revenue requirement to ensure financial viability of the utility service providers and the continuous decline of the cedi against the United States dollar also played a major role in the decision-making process.
Full cost recovery
Ms Jantuah emphasised that bearing in mind the social impact a full cost recovery would have on certain categories of consumers, the lifeline tariff intervention scheme was still in place to ensure that consumers within those categories were not overburdened.
“There have been a significant change and increase dependency on thermal generation and this has impacted on the cost of generation and supply by the utility providers”, Ms Jantuah said.
Answering queries from the media on the worsening power crisis, which had seen load shedding being done in a haphazard manner, Ms Jantuah said that the providers had been tasked to submit a schedule to the commission for approval.
“We are determined to ensure that the load shedding is managed properly,” she said.
Ms Jantuah could, however, not provide details as to when power supply from the Karpower barge would be integrated into the national grid to provide a respite for consumers.
She expressed the hope that the completion of work on the AMERI Plant at Aboadze in the Western Region as well as work on other power plants within the Tema power enclave would ameliorate the situation.
Previous consultative processes
The 2015 tariff adjustment consultative processes could be described as the most rigorous one conducted by the PURC, with the general public, organised labour and civil society organisations kicking against the proposals for upward adjustments submitted by the utility providers.
While the Trades Union Congress (TUC), in August, this year, warned it would not tolerate astronomical increase in tariffs, a former Chief Executive Officer (CEO) of the Volta River Authority (VRA), Dr Charles Wereko-Brobby, also threatened to sue the PURC, if it went ahead to increase tariffs for the 2015/2016 fiscal year.