The Public Utilities Regulatory Commission (PURC) has stated that it has initiated the processes for the examination and approval of electricity and water tariffs for the 2022-2027 multi-year tariff review period.
The tariff evaluation period is in accordance with the PURC Act, 1997 (Act 538).
A statement from the PURC indicated that “the multi-year tariff review process commenced with the receipt of proposals from the utility service providers including Volta River Authority (VRA), Ghana National Gas Company (GNGC), Ghana Grid Company Limited (GRIDCo), Electricity Company of Ghana (ECG), Northern Electricity Distribution Company (NEDCo), Enclave Power Company (EPC) and Ghana Water Company Limited (GWCL).”
The statement further noted that “in line with the commission’s processes, the utility companies have been given the platform to engage stakeholders on their tariff proposals including the ministry of finance, ministry of water resources and sanitation, parliamentary select committee on water, works and housing and the development partners.”
The commission has assured the public that the tariff determination process will be transparent, inclusive and participatory.
Read the full statement below:
Upwards adjustment
Meanwhile, the Electricity Company of Ghana (ECG) in its proposal is demanding a 148% increase in tariffs.
A proposal from the power distributor submitted to the Public Utilities Regulatory Commission (PURC) wants the adjustment to cover the period 2019 to 2022.
ECG has subsequently proposed an average increase of 7.6% in tariffs over the next four years to cover distribution service charges (DSC).
ECG attributes the high increase in distribution service charges to the gap that has developed over the years between the actual cost recovery tariff and the PURC-approved tariffs, as well as the cost of completed projects.
It also mentions the continual application of the prevailing tariff (which is 14% lower) beyond the stipulated regulatory period and the effect of macroeconomic factors such as inflation and exchange rate fluctuation.
Electricity tariffs will have to go up
Benjamin Boakye, the executive director of the Africa Centre for Energy Policy (ACEP), has said that electricity tariffs in Ghana will have to be adjusted upwards.
He said this has become necessary because the tariff has experienced a roughly 32% loss in value since it was last reviewed in 2019.
Speaking with Emmanuel Aboagye-Wiafe on Energy 101 on Monday (9 May 2022), Boakye said: “I think tariffs obviously will have to go up. If you look at the tariff structure, the last review or adjustment that we saw in 2019, between that time and now, the tariff has lost about 32% of its value. So, even by adjusting it by the dollar alone, it has to be adjusted upwards.”
He added, “If you also look at under-recoveries, last year, ECG could only recover about 50% of their revenue requirement. What that means is that the government has to find money to offset the difference of nearly US$1.25 billion and that far exceeds our investment in social infrastructure … so, it’s not sustainable to use tax revenue and loans to offset under-recoveries by ECG.”
Nicholas Brown
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