AGI rejects 172% water tariff hike for beverage producers

The Association of Ghana Industries (AGI) has called for an immediate reversal of the 172 percent hike in water tariff for beverage producers.

The AGI also kicked against the creation of a new category of water consumers – Commercial Bottled Water and Drinks – under which beverage producers have been placed.

The category was created last August with a tariff of 316 percent increment and later reviewed to 172 percent last month. Companies under the new category previously fell within the industry class – which saw a hike of 48 percent in the latest review.

However, with the implementation of the new utility tariffs announced by the Public Utilities Regulatory Commission (PURC) for the first quarter of this year having taken effect on February 1, the AGI said this significant increment is a retrogressive decision with dire consequences for the industry and utilities.

“With the foregoing, AGI is calling on the PURC to maintain its beverage sector companies in their industry category which has seen a 48 percent increment in water tariff. We believe industries are high-revenue customers for Ghana Water Company and deserve equity in the water pricing we see.

“We urge the government to help stem the tide of our macro-economic instability, which is a major trigger for some of the changes in tariffs levels and price hikes,” its president, Seth Twum-Akwaboah, said during a press conference in Accra.

The AGI is an umbrella body of leading domestic manufacturers, and buttressing its call for a fair review said the principle of equity was largely missing in the major tariff review conducted in August last year for water – when a particular customer category was asked to bear a 316 percent increment in a single tariff review.

“The AGI wishes to reiterate that a tariff increment of 316 percent and subsequently 172 percent for its beverage sector under Industry will have dire consequences for Industry and the Ghana Water Company.

“Our Utilities risk losing revenue if this trend ends up collapsing the companies. We think it is unfair for the PURC to demand a significant share of the revenue from the Industry, whose cost of service is cheaper. We urge the PURC to make public the real cost of service for each consumer category to engender transparency and fairness,” Twum-Akwaboah said during a press conference in Accra.

On the reclassification of beverage producers, he said: “We do not think the creation of a new consumer category addresses the challenges in our water distribution system. Such an astronomical tariff increment in a single revision is retrogressive and shows no empathy for Ghana’s ailing Industrial sector. We all need to wake up to the looming collapse of our local industries, which hold the key to job creation and our economic recovery”.

Extra burden

Twum-Akwaboah explained that industries are already under pressure from an unstable business environment and were hoping to see signs of recovery this year.

He, therefore, lamented that the plight of local producers could be further worsened by the utility tariff increment; as well as inflation at 54.1 percent, VAT at 21.9 percent, rising fuel prices and threats of excise duty increments.

All these developments, he bemoaned, pose a serious threat to employment prospects and the survival of businesses. “Again, we have noticed a 48 percent increment in water tariffs for industry effective this February, which is a significant deviation from the 8 percent average increment as announced,” he added.

Indeed, within a period of fewer than six months, electricity tariffs have also shot up significantly on two occasions – 26.6 percent in September 2022 and 29.9 percent for this quarter, totalling a whopping 56.5 percent.