Public Says No to New Tariffs

A cross section of the public has called on the Public Utilities Regulatory Commission (PURC) not to approve the new tariffs proposed by three utility companies, because the companies have not lived up to expectation.

The Volta River Authority (VRA), Electricity Company of Ghana (ECG) and the Ghana Water Company Limited (GWCL) had stated their reasons for a proposed hike in tariffs for this year yesterday, at a public forum in Accra.

In its tariff proposal the VRA asked the (PURC) to approve a Bulk Supply Tariff of ?478 kWh to enable it recover the full proportion of the cost of supply since the existing tariff of ?194 covers only 40%.

The VRA said this has become necessary because of the high cost of thermal generation due to increase in fuel prices and increase in capacity charges. Also, the depreciation of the cedi against the major currencies has affected the operations of the company because almost 85% of the inputs for the company are imported.

In addition, the VRA said only 45% of the proposed tariff in the year 2001 was approved leading to a net loss of ?364 billion last year.

ECG submitted a proposal for tariff increase of 60% on the Distribution Service Charge (DSC) representing ?313.6 per KWh as against ?196. ECG stated that the proposed increase does not include the proposal for VRA's Bulk Supply Tariff. Giving reasons for the increase, the company said it would continue with the short term, medium and long term system improvement programmes and also acquire remote monitoring resource equipment to monitor the system more efficiently among others.

GWCL which proposed a 69% upward adjustment in water tariff said the increase will yield a unit price of 62% per metre cube as against 35 cents. Should PURC approve the tariff it means that domestic consumers would pay ?40 for a bucket of water as against the existing ?18. Also, for a maximum consumption of over 10,000 litres the rate goes up to hundred cedis a bucket instead of the existing rate of sixty five cedis.

For commercial and industrial consumers the rate proposed is ?127 per bucket representing an increase of 74% from the existing level of ?73.

The GWCL said the adjustment has been constrained by the affordability criteria under which households would not use more than 5% of their total income on water while the industrial and commercial sector would not exceed 3% of their total turnover on water.

The Chairman of PURC, Nana Dr. S.K.B. Asante said such hearings are stipulated in the PURC Act of 1997 as a mandatory prerequisite to any tariff review by the Commission. He said the Commission is not only concerned with periodic reviewing of tariffs but it also insists that there must be a strict co-relationship between an upward adjustment of tariffs and a substantial improvement in the quality and efficiency of the delivery of services to consumers.

He said an important factor in considering the current proposal will be the extent to which the utilities have faithfully utilized accrued revenues for specific items agreed with the PURC.