6.56% Electricity tariff reduction won’t exacerbate energy sector debt – PURC

Dr Ishmael Ackah, the Executive Secretary of the Public Utilities Regulatory Commission (PURC), has dismissed concerns that the recent 6.56% electricity tariff reduction for certain customer groups will worsen the energy sector debt.

The Independent Power Producers Ghana (IPPs) on Monday, March 4, raised serious concerns that the country’s power sector is nearing a critical point.

The Chamber warned that by the end of 2024, the sector could accumulate an additional debt of approximately USD$1.8 billion, owed solely to the IPPs.

This potential increase is linked to the PURC’s recent decision to further lower electricity tariffs, a move made against the backdrop of rising variable costs related to electricity production.

While the decision aims to alleviate consumer burden through reduced tariffs, it is expected to place a heavier financial load on the IPP, possibly leading to a significant rise in sector debt.

However, in a statement released on March 5, Dr Ackah stated that the PURC is conscious of the financial viability of all utilities and the well-being of the consumer.

He further explained that increases in tariffs do not automatically lead to a decrease in energy sector debts or assured payments to IPPs.

Instead, distribution companies must collect the approved tariffs before any payments can be made to the IPPs.

“The public should dispel misinformation that the few customer groups that witnessed a reduction in the tariffs will consequently compound the debts in the energy sector.”