John Jinapor
The Minority in Parliament has raised concerns about the electricity tariff hike by the Public Utilities Regulatory Commission (PURC).
According to the Minority, the “tarrif adjustment leads to almost 77 percent increment in less than 6 months.”
A statement by the Minority in Parliament, Friday, 20 January 2023, signed by its Ranking Member on the Mines and Energy Committee, John Jinapor said: “A critical look at the tarrif structure as announced reveals that all residential customers who consume between 0-300 kWh have witnessed a jump from GHp/kWh 65.4161 to GHp/kWh115.72, representing an almost 77% increase in price since September 2022.”
It noted that: “The bulk of residential customers falls between 0-300 kWh band and will therefore be adversely affected by the almost 77 percent price increment.”
It further noted: “The increment is on account of the worsening Ghanaian currency (Ghana Cedi) against other major currencies. Recently, the Cedi has witnessed a free fall with the local currency rated as the second worst performing currencies in the world.
“Already, inflation is galloping and getting worse by the day, with the current rate estimated at over 50%, and therefore, this increment will only exacerbate the current high cost of living. This will automatically worsen the plight of the already impoverished Ghanaian.”
It indicated what it described as attempts “by the PURC to skew the generation mix in favour of thermal power as against hydro to create an unfair price hike to the detriment of consumers.
“We are confident of hydro generating not less than 35% based on the Energy Commission’s projections. We therefore reject the 26% Hydro mix used in computing the recent tarrif adjustments.”
The Minority in Parliament therefore called on the PURC, “to refrain from such unorthodox methods, which, by all intends and purposes, is a back door approach to meet the IMF conditionalities in the energy sector.”
Utility consumers will start paying more for water and electricity beginning from 1 February 2023 as the Public Utilities and Regulatory Commission has announced new tariffs.
In a statement issued on Monday, 16 January 2023, the PURC said consumers are to pay 29.96 per cent more for power and 8.3 per cent for water.
“The PURC is equally mindful of the current difficult economic circumstances but notes that the potential for outages would be catastrophic for Ghana and has to be avoided,” the statement said.
The PURC said it, therefore, sought to balance the prevention of extended power outages and their deleterious implications on jobs and livelihoods with “minimising the impact of rate increases on consumers”.
“The Commission, therefore, decided to increase the average end-user tariff for electricity by 29.96% across the board for all consumer groups (Table i). The average end-user tariff for water has also been increased by 8.3% (Table 2). The Commission, however, approved varying rate adjustments including some reductions for selected industrial and commercial consumers as part of the ongoing restructuring of the existing water rate structure”, the statement added.
The PURC said it considered four factors for the hikes: the cedi-dollar rate, the inflation rate, the generation mix and the weighted average cost of natural gas.
“Since the announcement of the major tariff in August 2022, these key variables underlying the rate setting have changed significantly,” the PURC said, explaining: “For example, the weighted average Ghana cedi/dollar exchange rate used for the major tariff review was GHS7.5165 to the US dollar”.
“Since then, we have witnessed the depreciation of life cedi against the US dollar and other major currencies. The projected weighted average Ghana cedi-US dollar exchange rate used in the first quarter 2023 tariff analysis is GHS10.5421/USD,” the Commission added.
The Commission also used a projected inflation rate of 42.63% in its tariff analysis for the first quarter of 2023.
“The combined effect of the cedi/US dollar exchange rate, inflation and WACOG is that the utility companies are significantly under-recovering and require an upward adjustment of their tariffs in order to keep the lights on and water flowing,” the statement added.
