PURC must favour industries in utility tariff increment to sustain businesses – GNCCI

ECG proposes 148% increase in electricity tariffs

Energy cost to businesses remains too high, GNCCI

Ethiopia and Kenya have better tariffs than Ghana, GNCCI

The Ghana National Chamber of Commerce and Industry (GNCCI) has stated that the Public Utilities Regulatory Commission (PURC) must take into consideration the impact of tariff adjustments on businesses and industries.

PURC is engaging stakeholders on the adjustment of electricity tariffs after the Electricity Company of Ghana proposed a 148% increment.

The Chamber however notes that per the current economic challenges any further increments, particularly in energy costs, will have grave effects on the country’s private sector.

They however want the regulatory commission to provide some cushion for these businesses by offering a comparatively lower tariff that is reflective of the production capacity of manufacturing and key service sectors.

In a statement, the GNCCI said, “Energy is one of the critical cost components of the business. While recognizing improvements in the energy situation over the last few years, the energy cost to businesses remains too high (comprising up to 30% of the cost of operation in some extreme cases). Businesses pay much higher energy in order to subsidize households. Whereas in many other countries, households pay higher energy costs to subsidize industry.”

“As we move into the integrated African market zone, the power tariff component of products will be a defining factor. Ethiopia and Kenya have better tariffs than Ghana; thus, making their products competitive.”

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.

“The result of ECG’s tariff proposal for the next five years shows an approximately 148% increase on the current DSC1 in 2022 and an average increase of 7.6% year on year from 2023 to 2026. The high increase in the DSC1 for the year 2022 could be attributed 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”.