Utility tariffs go up

The Public Utilities Regulatory Commission (PURC) yesterday announced a 78.9 per cent increase in electricity and 52 per cent in water tariffs effective October 1, this year.

The increments fall short of the 166 per cent and 112 per cent requested by the electricity and water providers respectively.

There has not been any major adjustment in water and electricity tariffs since June 1, 2010. However, the Automatic Adjustment Formula was implemented.

But in a sharp reaction, the Trades Union Congress (TUC) says it is shocked by yet another astronomical increase in utility tariffs.

In a statement issued in Accra yesterday, the labour movement said “these increases have come at a time when ‘almighty’ government could only afford to increase public sector pay by just 10 per cent. The increases have come when wages have already been negotiated. We also are in a period when all other prices including fuel and transport have been pushed up well beyond the pocket of the average Ghanaian”.

 

Considerations

Justifying the increase in the tariffs at a press conference in Accra yesterday, the Executive Secretary of the PURC, Mr Samuel Sarpong, said the commission took into consideration the social impact of certain categories of consumers who needed to be supported to ensure that such consumers were not overburdened.

In arriving at its decision, Mr Sarpong said, the commission was guided by its rate settling guidelines and considered factors which balanced consumer and investor interests, the economic development of the country, optimal generation mix and growth in demand.

To satisfy those requirements, the commission also considered the fair apportionment of total cost of supply to various classes of consumers and a certain minimum level of service (lifeline supply) at an affordable price to residential consumers who may not be able to pay full cost.

The commission also examined, among other things, the appropriate rate of return on investments to satisfy the interests of investors in the national power generation and distribution system.

Mr Sarpong also indicated that the commission's rate setting guidelines further considered high productivity cost of electricity using crude oil as against hydro (water from Akosombo, Kpong and Bui).

"The Ghanaian cedi's depreciation against the United States dollar and the growth in demand of 10 per cent per annum in electricity consumption have necessitated the need for more resources and cost to enable utility providers to meet the needed expansion," Mr Sarpong said.

He said the country's energy situation over the past one year had encountered some challenges due to the unavailability of natural gas through the West African Gas Pipeline ( WAGP)  for electricity generation which resulted in acute load shedding situation in the country.

 

TUC

In its response, the TUC said the labour movement and the working people of Ghana was not opposed to tariff adjustment.

“We have consistently called on government to review tariffs as and when the fundamentals of the tariff structure change and warrant adjustments – upward or downwards.

“We made this point in 2010, the last year in which such massive increases were announced.

“Unfortunately, government knowing and pursuing its own political interests chose not to implement what all stakeholders agreed was the best way forward.

“With the political interests achieved, the people of Ghana are now being called upon to bear costs of political expediency,” the statement said.

The TUC said it was of the view that the approach to utility price management was unfair to the people of  Ghana and a demonstration of selfishness on the part of the government.

“These huge increases show insensitivity on the part of a government that could only grant 10 per cent pay increase. Workers and Ghanaians in general will be unduly over-burdened by these increases.

“The TUC will consult it structures and in due course act appropriately,” the statement said.

 

Public reaction

Meanwhile some members of the public interviewed expressed different opinions on the tariff adjustment

Mr Eric Asebu, a human resource practitioner, described the increment as outrageous and too expensive for the ordinary Ghanaian and appealed to the government to do something about it.

A worker at Rana Motors, Mr Lucas Sosu, said the increment would affect the workers and companies very much and, therefore, something should be done to reduce the tariff.

Ms Mabel Osei, a student, said the increment would make life difficult and, therefore, salaries should be increased so that workers could make ends meet.

Kwesi Okyere, an accountant, said the increment would affect the prices of goods and services, which would eventually have implications for the purchasing power of workers.

 

Background

The utility service providers submitted proposals to the PURC for upward adjustments in utility tariffs some months ago to enable them to cover their operational and maintenance costs.

The electricity producers, comprising the Electricity Company of Ghana (ECG), the Volta River Authority (VRA), Ghana Grid Company Limited (GRIDCo) and the Northern Electricity Distribution Company (NEDCo’s) were requesting 166 per cent increase.

On the other hand, the Ghana Water Company (GWC) also asked for 130 per cent. However, since 30 per cent of the cost of the GWC is from electricity, it has to wait for the ECG before it can also indicate its percentage increase.

The commission had to follow laid-down procedures before it could make any major decision on the request for tariff adjustments. As part of the process, the commission investigated the proposals and took into consideration concerns of consumers and inputs from stakeholders.

 

Government support

 The PURC reminded the general public that the tariffs alone could not raise the needed capital for the utilities to operate efficiently and effectively.

In that regard, the commission has urged the government to continue to source funds to supplement the tariff income to enable providers to maintain, replace and repair utility equipment as add-on to the needed investments that would bring about the required improvement in the energy generation sector.

 

Quality of service

The commission, which also expressed worry about the lapses in quality of service, especially in the area of response to fault, communication to the general public on system reliability and the activities of providers amongst others, called for proactive measures on the part of providers towards addressing these challenges.

The commission, in that regard, tasked the providers to comply with prudent cost control measures as a means of ensuring fair returns on investments.

The commission also challenged the providers to provide the necessary guidelines and supervision to ensure effective and efficient operations.

 

Sanctions

The Executive Secretary further announced that the PURC would review its laws to ensure that providers are compelled to render appropriate service to their clients.

He said the commission would not hesitate to name and shame providers, fine, as well as impose imprisonment penalty on heads of providing institutions.

He also indicated the commission's preparedness to strengthen its monitoring system by putting in place stringent measures to ensure providers comply with laid-down regulations.

By Della Russel Ocloo & Salomey Appiah/Daily Graphic/Ghana

Writer's email: della.russel@graphic.com.gh

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