Tariffs hike: Energy sector has to recover debts – Agyekumhene

A member of the Public Utilities Regulatory Commission (PURC), Ishmael Agyekumhene, has said that the energy sector of the Ghanaian economy is currently saddled with debts, hence the need to increase electricity tariffs to settle those debts.

He said unless the state has money somewhere else to use in defraying the debt, the sector will have to pay the debt itself through tariff increment.

He was commenting on the upward adjustments in water and electricity tariffs as announced by the PURC in a statement on Monday 30th September, 2019.

The PURC’s statement signed by Mami Dufie Ofori, Executive Secretary said: “Following a review of Electricity and Water tariffs for the fourth quarter 2019 which is from October – December 2019, the Public Utilities Regulatory Commission wishes to announce for the information of consumers of electricity and water that there has been an upward adjustment in the existing tariffs. The increase is 5.94% for electricity tariffs and 2.22% on water tariffs across board for all customer categories effective October 1, 2019.

“The Automatic Adjustment Formula (AAF) is a tariff mechanism that seeks to track and incorporate movement in key determining factors to reflect the real cost of electricity and water quarterly.

“The following factors were considered in computing he automatic adjustment formula : Ghana Cedi-US dollar Exchange rate, Inflation, Price of crude and natural gas, Fuel mix (crude, oil and natural gas, Generation mix (hydro and thermal), Power purchase cost, Electricity cost (a major cost component in water production)”

The increment has however, attracted flak from the Member of Parliament for Yapei Kusawgu, John Jinapor, who accused the PURC of shrouding its operations in secrecy.

Speaking to Accra-based Joy FM on Tuesday October 1, Mr Jinapor said: “This is not tenable because the Monetary Policy Committee which is the custodian of, or, is the official source when it comes to the exchange rate determination at the Bank of Ghana indicated that the cedi has been stable.

“When you issue a political statement and just say that you increased it by 4.94 and you expect that we should swallow that hook, line and sinker, it begs the issue.

“This is the same PURC that is creating this mess for us. I will plead that we interrogate this matter. The people of Ghana determine where we move as a country and so the PURC cannot be that opaque, they ought to be transparent, they ought to be accountable to the people of Ghana.”

Mr Agyekumhene reacted on the same platform that: “As we speak right now the exchange rate is close to 5.4. The revenue shortfall that the utilities have experienced over the period is close to about GHS18m. If we don’t do anything about it this is going to continue to pile up.

“Everything that the PURC has done has been very transparent and I am surprised that the Honorable Jinapor is bringing PURC into his politics.

“How is he saying tariffs should remain where they are? That was how come we were in ‘dumsor’ (energy crisis) for all these years. The energy sector has to recover. Unless somebody is bringing money to recover any shortfall the sector will have to be able to pay for itself.”