ELECTRICITY tariff has been increased by 11.17 per cent, effective Monday, July 1, this year, the Public Utilities Regulatory Commission (PURC) which approved the hike has announced.
The 2019-2020 major tariff review decision followed “prudent” cost review and effective monitoring undertaken by PURC, a statement issued by Mrs Mami Dufie Ofori, executive secretary, in Accra yesterday, said.
“The key objective of the tariff review was to sustain the financial viability of utility service providers as well as ensuring the delivery of quality service to customers,” it said.
In arriving at the decision, it said the commission received and considered proposals from stakeholders in the electricity and water sectors including Volta River Authority (VRA) and Ghana Grid Company Limited (GRIDCo).
Others were the Electricity Company of Ghana (ECG), Power Distribution Services (PDS) Ghana Limited, Northern Electricity Distribution Company (NEDCo) and Enclave Power Company Limited (EPC).
“In line with the Commission’s regulatory oversight mandate, extensive technical and financial analyses of the proposals were undertaken”, the statement said.
Aside the hike, the commission abolished the Maximum Demand Charge on industrial customers (Special Load Tariffs-STL Customers) as a major policy move meant to advance the competitiveness of Ghanaian industries.
“It is expected that this policy will result in some SLT customers experiencing savings in their overall electricity bills,” the statement added.
Details of the approved electricity tariffs and the rationale for the decision, it stated, would be published on the Commission’s website.
It said the commission was reviewing a tariff proposal received from the Ghana Water Company Limited (GWCL) and that the decision would be announced in due course.
The Commission reiterated its commitment to ensuring the sustainability and growth of quality electricity and water service provision for socio-economic development.
Meanwhile the Private Enterprise Federation (PEF) has described the increase as unacceptable saying it would worsen the already high cost of doing business in the country.
PEF Chief Executive Officer, Nana Osei-Bonsu, in an interview, said the basis for the increase was unclear as the production cost of the utility companies that informed the cost recovery strategy had not been done.
“As it is now, we have not done any vetting of the production methodology to determine whether they are producing at maximum inefficiency. So if we see those numbers, then no one can complain about the cost recovery.”
“Once that had not been done, it was unacceptable and we think that it is going to exacerbate the high cost of doing business with the tariff increase,” he said.
Although according to Nana Osei-Bonsu, the elimination of the Maximum Demand Charge on industrial customers was in the right direction, it would make no difference.
“The increase is like taking from the left and giving to the right. It will still affect businesses,” he said, adding that the private sectors should not be left out in the determination of utilities as they were key stakeholders.
The Deputy Secretary General of the Trade Union Congress (TUC), Mr Joshua Ansah when contacted, deferred the TUC’s reaction until the end of its meeting on Tuesday, June 25, during which the structures of the union would deliberate on the tariff.
As of the time of going to press, efforts to get the take of the Association of Ghana Industries (AGI) on the new tariff were unsuccessful.
The announcement of new tariff has been expected since the beginning of the year as the PURC announced in February this year that the new electricity tariff would take effect from July 1, 2019, following review consultations.
In a press statement issued on February 27, 2019, the Commission explained that its decision to postpone the notice of the tariff to July was due to factors including critical emerging issues in the sector which could affect the final tariff setting.
Last year, the PURC announced a general reduction in electricity tariffs effective March 15, 2018 in which residential customers saw a 17.5 per cent reduction, while non-residential customers had tariffs cut by 30 per cent.
Those in the mining sector had a 10 per cent tariff cut, and 25 per cent cut for Special Load Tariff Customers. This followed assurances by the government in its 2018 budget read in 2017 that electricity tariffs would be reduced.
BY JONATHAN DONKOR