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Back To Square One: Utility Rates dwarf payrise

Wed, 8 May 2002 Source: Chronicle

...Public Against New tarrfis
Barely a week after Government announced the 30% increase in the minimum wage of workers, the two main utility companies have also proposed an average of 137% hike in their tariffs.
The companies, Ghana Water Company Limited (GWCL), and the Electricity Company of Ghana (ECG) yesterday proposed a 69% and 205% hikes respectively in their tariffs.

While the water company wants the new rate to start July 1, this year, effective date for the new electricity rates had not been released at press time last night.

Both utility companies had submitted their proposals to the Public Utility Regulatory Commission (PURC).

For water, what was asked specifically for was an increase of the unit price per metre cube from 35 cents to 62 cents.

That translates into domestic consumers of water paying ?40 per bucket, whilst commercial and industrial consumers pay ?127 per bucket; an increase of 74%.

An official of the water company said a proposed increase of the Volta River Authority tariffs from ?194/KWH (44.9%) to ?478/KWH (about 146%) and other official cost necessitated the increase the GWCL is calling for.

But even before the proposed hike was announced many Ghanaians had started accusing the multinational institutions of forcing Government to effect the increases.

Even though the public met the proposals with hue and cry, the Finance and Administrative Manager of GWCL, Robert Tackie, said the upward adjustment had been constrained by the affordability criteria under which households will not use more than 5% of their total income on water.

In other words, the water tariffs should have shot up higher but for the consideration of the ability to pay.

As regards the industrial and commercial sectors, he said, the GWCL expects that the impact of the proposed tariff will appreciably be negligible, arguing that companies’ expenditure on water will not exceed 3% of the total turnover.

The Head of the Public Relations at the PURC, Mr. Afari-Gyan, told Chronicle that out of the 300% rise asked for last year the Electricity Company was granted 95%.

So, it is likely that the ECG is seeking to be granted the remaining 205% proposed electricity tariff.

The VRA, which sells bulk power to ECG for distribution, on the other hand, says its proposed increase of 146% in the Bulk Supply Tariff (BST) is to enable the company cover the full cost of generating and transmitting electricity from both hydro and thermal sources to substations.

The VRA has proposed an upward adjustment in the BST from the existing ?194KWH to 478KWH.

Last year VRA asked for upward adjustment in BST from ?95KWH to ?432KWH but only 44.9% or ?194 of that request was granted.

On the proposed increase in both water and electricity tariffs, it is not clear whether the PURC will grant GWCL the 69% or the ECG’s 205%.

When reached on the phone, the PURC indicated that it would be holding a public forum this morning with stakeholders, corporate bodies and individuals to come out with acceptable percentages.
In a related development, the Trades Union Congress sees these new tariff proposals as a ploy by the government to take back far more than the 30% minimum wage increment.
The Head of Administration at the TUC, Togbe Adom Drayi II, told Chronicle yesterday that, even though the congress is reserving its comments until the outcome of today’s public forum, it hoped that the percentage that would be granted will not be too high for the average Ghanaian worker.
Workers’ agitation notwithstanding, authorities in the water and power supply business think that the hikes are justifiable and affordable to the average consumer.
Dr. Charles Wereko Brobby, the VRA chief executive, in an interview last week wondered how people found money to buy, say, television sets at around ?3 million but claimed they could not pay ?30,000 to power them over six months.