Utility tariff increases: The government has cushioned Ghanaians – Spokesperson

Utility tariffs in the country would have doubled without the government’s intervention, the Government Spokesperson on Governance and Security, Palgrave Boakye-Danquah, has said.

According to him, proposals brought before the government was made at a high rate, but the government significantly reduced them to keep tariffs below 30%.

“The proposals that the utility companies made were even far more than the consideration that PURC and government have been able to put together. Ghana Water made a proposal of 300%, and ECG made a proposal of 148%.”

“NEDCo also made a proposal of 113% increment and VRA a proposal of 37% increment. When you look at all of these, clearly you see that the government has cushioned the impact on the Ghanaian people, and we must appreciate that,” he noted.

Boakye-Danquah said in light of recent economic challenges, the cushioning was done to ensure that Ghanaians could afford electricity and water, among other things.

Proposals

On August 15, the Public Utilities Regulatory Commission (PURC) announced tariff increases effective September 1, 2022.

Tariffs for electricity and water are expected to go up by 27.15% and 21.55%, respectively.

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 a 113 per cent increase over the existing tariffs of the Northern Electricity Distribution Company (NEDCo).

Framework

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 increment rates over five years, 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 said 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, and 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 respondents thought the current electricity tariffs were not commensurate with the quality of service received from the electricity utilities due to frequent voltage fluctuations and 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.