Energy Tariff Adjustments Create Production, Transmission Challenges in Ghana

Written by Makula Dunbar

Oct 25, 2013

The Technical Working Group (TWG) on Utility Tariffs has stated that a 50 per cent increase in the price of electricity is not sustainable.

This is because the revenue that will accrue from that increase will not be able to cover the production and transmission cost.

The analysis made by the TWG indicated that in order to cover at a minimum the cost of generation and transmission, tariff adjustments above 60 per cent might be necessary, taking into consideration the need to minimise the negative budget implication.

The recommendations were contained in an interim report that the TWG presented to the government yesterday.

The Chairman of the TWG, Dr Joe Abbey, presented the report to the Chief of Staff, Mr Prosper Douglas Bani, at the Flagstaff House.

Present at the presentation was the Minister of Finance, Mr Seth Terkper.

The TWG was constituted by the Vice-President, Mr Kwesi Bekoe Amissah-Arthur, following the increases in utility tariffs by the Public Utilities Regulatory Commission (PURC).

The PURC approved 78.9 per cent and 52 per cent increases in electricity and water tariffs, respectively.

Following the increases, organised labour held a press conference and gave the government and the PURC a 10-day ultimatum to reduce the tariffs or face a nationwide strike.

It has since called off its intended strike.

The TWG was mandated to examine possible scenarios and their implications for the sustainable and efficient provision of utility services and the impact on the national budget.

It was also tasked to examine mitigating measures that would allow industry and consumers to adjust any new levels of tariffs and make proposals for the restoration of the automatic tariff adjustment formula (ATAF).

Presenting the report, Dr Abbey said the group applied the various percentages — from 50 per cent, 60 per cent, 70 per cent to 120 per cent — to the pre-October 1, 2013 average end-user tariff of 22.3349Gp per kilowatt hour.

He said the higher the percentage change approximating the 120 per cent, the lower the budgetary impact.