Pay reasonable tariffs to sustain supply — Terpker

The Minister of Finance, Mr Seth Terkper, has said consumers of electricity and power must pay reasonable tarrifs to ensure a constant supply from utility companies.

He said the failure of government to charge the right tariffs for electricity and water has contributed largely to the utility companies in charge of the supply to be saddled with a lot of debts.

“If, for instance, it costs GH¢120 to generate electricity and consumers pay GH¢100, the question then is: Who pays the difference of GH¢20?, he asked at the launch of the 2016 Citizens Budget at Dodowa in the Greater Accra Region.

While admitting that the difference would be financed through subsidy from the budget, Mr Terkper explained that “some subsidy is warranted, but that is why we are saying that for the distribution to be consistent, it is important for citizens to a large extent to pay the right tariffs.”

Currently, the national power producing company, the Volta River Authority (VRA), is indebted to the Ghana National Gas Company to the tune of US$142 million. The debt covers gas supplied between April to October 2015 from the gas plant at Atuabo to the VRA’s thermal plants at Aboadze in the Western Region.

In October 2015, Nigeria Gas (N-Gas) threatened to cut gas supply to Ghana as a result of the failure of the VRA to pay its debt for gas supplied under a contractual agreement. After discussions, however, N- Gas, which supplies gas to Ghana through the West African Gas Pipeline (WAGP), gave the VRA a February 2016 ultimate to clear its outstanding debt of US$171.5 million.

The Director of Budget at the Ministry of Finance, Mr Patrick Nomo, reiterated the need for consumers to pay reasonable tariffs to help government sustain its efforts of providing universal access to power in the country.

Government, he said, was addressing the current power challenges from both the generation and distribution side through a number of projects, which needs to be sustained through the payments of the right tariffs.

Presenting an overview of the Citizens Budget at a launch ceremony in Dodowa, Mr Nomo said the national electrification project, which is aimed at extending power supply to every part of the country, was ongoing.

“The national electrification project is going on; it is being addressed from both a production and distribution side and that is why there is the need to pay reasonable tariffs to ensure that this effort can be sustained. If you don’t pay reasonable tariffs, government will continue to pump in resources without getting much from it,” he said.

Citing the Sunon Asogli expansion project, Mr Nomo said the first half of that project with an installed capacity of 180 Megawatts (MW) was to be commissioned before the end of 2015, while the remaining 180MW would be completed by the second quarter of 2016.

He also added that 1,500 communities would be connected to the national grid in line with the goal to achieve universal access to electricity by 2020.

The Public Utilities Regulatory Commission (PURC) has consistently increased tariffs in the country without a corresponding increase in the quality of service.

In 2013, electricity and water tariffs went up by almost 79 per cent and 52 per cent, respectively. In September 2014, electricity and water tariffs went up by 6.54 percent and 4.54 per cent, respectively. In December 2015, electricity tariffs are expected to go up by 59.2 per cent while water tariffs for residential consumers have been increased 67.2 per cent.

In spite of these increments, the supply of water and electricity has not seen any major improvement and that is why consumers always contend with the increases by the PURC.

Addressing power challenges

The 2016 Budget Statement highlighted that government had initiated measures to address the power supply challenges currently facing the country. It said work on the 110 Megawatts (MW) TICO expansion was completed and the commissioning and commencement of commercial operations was expected shortly.

“Under the 220MW Kpone Thermal Power Project, mechanical completion was achieved and it is expected to be commissioned for operations to commence before the end of the year. The Volta River Authority (VRA) is expanding the existing Siemens plant (49.5MW) by the addition of 38MW. The project is about 90 per cent complete and is expected to be completed before the end of 2015,” it said.  — GB

In 2016, the government it says it will continue to pursue its objective of increasing the installed generation capacity of the country to meet the growing demand for electricity. In this regard, a total of 1,053MW installed capacity is scheduled to be added to the existing installed capacity of the country.

The 2016 budget also said government had initiated a major programme to reduce the frequency and duration of power outages experienced by electricity consumers. The initial programme is targeting the three regions of the Electricity Company of Ghana (ECG) that have the worst outages record.

“Working together with the ECG, the programme aims to identify the interventions required to reduce the level of outages occurring and agree on a plan for implementation with the ECG that will be monitored by the Energy Commission,” it said. GB