Government to get ‘tough’ on tariffs

Power Minister Dr. Kwabena Donkor has hinted that government will have to take a ‘tough’ decision regarding power tariffs in order for them to reflect the actual cost of generation.

He maintained that “underlying the historic underinvestment in generation, transmission and distribution has been the unattractive tariff regime. We have had the benefit of legacy hydro that has enabled Ghanaian tariffs to be kept lower than is prevalent in the sub-region”.

Addressing investors, energy experts and players in the power sector on the opening day of the Powering Africa Summit in Accra, Dr. Donkor in explaining the need for the tariff adjustment said: “Unfortunately, as demand expands by about 12% per year, the role of legacy hydro diminishes and tariffs must now reflect the actual cost of service”.

According to him, by December this year, Akosombo hydro will only constitute 38% of VRA’s generation mix.

Utility companies are currently engaging the public as part of processes for a potential tariff increase, even though a section of the public is against the hikes.

The Public Relations Director of the Public Utility Regulatory Commission (PURC), Nana Yaa Jantuah, has said that the tariff-setting process is made to go through a pre-filing notification, a preliminary review, public hearings, and stakeholder consultations among other processes.

Decisions arrived at are gazetted and published, using the mass media.

Those processes, Ms Jantuah said, are aimed at enhancing fairness, equity and transparency in the determination of utility tariffs.

The PURC also clarified that it will consider the price of the generating plant that government intends bringing into the country to solve the power crisis, subject to its arrival and time of deployment.

However, Dr. Donkor assured investors, both local and foreign, that “The tariff question is being addressed, and the government will not shy away from taking the tough decisions that need to be taken”.

Three utility companies have called for a major tariff review, proposing more than a 100 percent increment in tariffs for 2015.

The Electricity Company of Ghana (ECG) wants the present tariff of 16Gp per unit consumed to be increased to 35Gp, while the Volta River Authority (VRA) is demanding an increase from 15Gp to 30Gp per unit.

Ghana Water Company Limited (GWCL) is also recommending an increase from GH¢1.70 per cubic metre (1,000 litres of water) to GH¢4.

GRIDCo also wants an increment of its present 4Gp per unit of transmission to 5Gp.

In order to address the country’s energy management, which is the availability of supply, affordability of supply and security of supply, the Power Ministry is encouraging both conventional and non-conventional forms of generation by advocating new gas-fired plants, biomass-fuelled plants, solar and wind farms, tidal-powered generation as well as clean coal fuelled generation.

Already, 330KV and 161KV transmission lines are being expanded across the country to enable evacuation of new generation capacity and to enhance exports to our neighbouring countries, the minister assured.