PURC not decided on tariff adjustment

The Public Utilities Regulatory Commission (PURC) has denied that power utilities, who are seeking more than twice the current level of consumer tariffs, have been granted only about a quarter of their demands.

Director of Public Relations and External Affairs of the Commission Nana Yaa Jantuah told the B&FT in an interview, “We are yet to agree on a percentage or figures because we have different tariff structures for resident and non-residential consumers. Even within that, there are different structures. We have to get prices for all these classes and that is what we are working on.”

In a tariff proposal submitted to the PURC early this year, the Electricity Company of Ghana (ECG) said while it is required to pay 26.5 pesewas per kilowatt hour to purchase power from the seven Independent Power Producers (IPPs) this year, the current bulk generation tariff provides for only 10.53 pesewas per kilowatt hour.

The company is therefore asking for a 166 percent increase in its current tariff, which would help it bridge its US$170million annual funding gap. The Volta River Authority (VRA), which sells power to the ECG, is also seeking an increase in tariff of 137.5 percent; Ghana Grid Company is demanding a 39.36 percent jump in its tariff; and the Ghana Water Company is asking for 99.39 percent.

“We are still calculating the figures, making sure that all the figures are right so that at the end of the day whatever comes out will be acceptable to the consumer while covering the operation and maintenance cost of the power producers,” Nana Yaa Jantuah said.

According to her, the process of calculating tariffs for the various structures is still ongoing and reports that the new tariffs will be announced in a fortnight cannot be right, since there is no timeline of that sort.

Finance Minister Seth Terkper has told the B&FT that the delay in adjusting power and water tariffs is causing the budget to haemorrhage resources and could prolong the time required to rebalance the government’s books.

Proposals for an increase in the tariffs, which have been frozen for almost two years, were submitted by the state-owned utility companies to PURC in the first quarter of the year -- but the regulator has yet to make a decision on the requests.

In the meantime, government -- which has clearly indicated a policy of subsidies-removal -- continues to incur obligations to the utility companies due the delayed tariff hikes.

“We know that there’s a process, and the PURC is going through the process. [But] the delay is causing a problem because since the prices have not been adjusted, every month we have to pay the differential,” said Mr. Terkper. “It only means that rebalancing the budget is taking longer,” he added.

The Minister did not reveal the actual cost to the budget, but the B&FT has learnt from the Volta River Authority (VRA) that government’s net debt to the power producer was GH¢20million in the last quarter of 2012 and GH¢57million in the first quarter of 2013.