The recent tariff adjustment leads to 77 percent increment in less than 6 months – John Jinapor

The Minority in Parliament has rejected the method adopted by the Public Utilities Regulatory Commission (PURC) in adjusting utility tariffs.

The PURC on Monday January 16 announced that electricity and water tariffs have been increased by 29.96 percent and 8.3 percent respectively.

The new tariffs take effect on February 1, 2023.

A statement issued by the Commission said “…The Commission, therefore, decided to increase the average end-user tariff for electricity by 29.96% across the board for all consumer groups. The average end-user tariff for water has also been increased by 8.3%.

“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.”

It added “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 PURC, therefore, sought to balance prevention of extended power outages and its deleterious implications on jobs and livelihoods with minimizing the impact of rate increases on consumers”.

In a statement signed by Yaapei Kusawgu Member of Parliament reacting to this, the Minorty said “We also note that 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 currency 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.

“We have also noted the attempt 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.”

Below is their full statement…

20/01/2023

For Immediate Release

MINORITY STATEMENT ON THE RECENT UTILITY TARRIF HIKES.

The Minority in Parliament has noted with concern, the significant price hikes in electricity tariffs by the Public Utilities Regulatory Commission taking effect from 1st February 2023.

This tarrif adjustment leads to almost 77% increment in less than 6 months.

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 should be noted that the bulk of residential customers falls between 0-300 kWh band and will therefore be adversely affected by the almost 77% price increment.

We also note that 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.

We have also noted the attempt 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.

It must be stated that the PURC is not the technical regulator hence, cannot arbitrarily skew the thermal/hydro mix contrary to the projections by the Energy Commission, which is the technical regulator of Ghana’s energy sector.

From the available data, all the 3 hydro dams have witnessed very high elevations at the beginning of 2023 and are therefore in better positions to produce more hydro electricity compared to the previous years. 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.

By this statement, the Minority demands of 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.

Hon John Jinapor
Ranking Member, Mines and Energy Committee