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Business News Thu, 12 May 2022

Inflation, exchange rates will be considered in decision to adjust tariffs – PURC

ECG proposes 148% increase in tariffs

A lot of factors go into tariff determination, PURC

ECG’s losses increased from 22 percent to 30 percent


There are a number of factors that guides the determination of tariffs by utility companies, including inflation, and exchange rate among others, PURC has stated.

According to the Public Utilities Regulatory Commission (PURC), all these factors will be considered in the decision to increase the tariffs.

This is because the Electricity Company of Ghana, the Ghana Water Company Limited, and other utility companies import some of the equipment and logistics they use to ensure the smooth running of their operations.

Head of Communications at the PURC, Ali Simon Jarana made the statement whiles speaking to the media after a stakeholder engagement on the proposals by the Electricity Company of Ghana (ECG) and the Ghana Water Company Limited (GWCL) to increase tariffs on Wednesday, May 11.

“There are a lot of factors that go into tariff determination. One is the interest of the consumer that is provided for by the Act that established PURC; the second is the interest of the investor community; third, we have regulatory benchmarks that the utilities must also meet.

We are also looking at some microeconomic indicators i.e. inflation, we are looking at the exchange rate, and the exchange rate because of the equipment they import. GWCL for instance, imports chlorine to treat the water, NEDCo will import Copper and steel.”

The Electricity Company of Ghana is demanding an increment of 148% on electricity tariffs from August 2022.

The company submitted a proposal to the Public Utilities Regulatory Commission (PURC) asking for an adjustment in electricity tariffs to cover the period between 2019 and 2022.

ECG also proposed an average increase of 7.6% in tariff over the next four years to cover Distribution Service Charges (DSC) while attributing the high increase in the 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.

However, ECG'S losses have been attributed to bad management practices.

Jinapor said “Why are they going back to 2019 and 2020? We cannot adjust prices for those years and go back again.

“Moreover, ECG’s losses have increased from 22 percent to 30 percent. These inefficiencies cannot be passed on to consumers. The other thing that is leading to this proposed increase is the exchange rate, the fall of the cedi is due to the bad management of the economy. The ordinary Ghanaian must not suffer.”
Source: www.ghanaweb.com
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