Ghanaians To Pay More Utility Bills Despite The Hard Economy Crisis
By Maxwell Nkansah
The water and electricity tariffs have been increased by 21 percent and 27.15 percent. In that order, the Public Utilities and Regulatory Commission (PURC) increased water and electricity tariffs by 21.1 percent and 27.15 percent, respectively. The new tariffs will take effect from Thursday, September 1, 2022. That means Ghanaians will be paying more utility bills as the economy keeps getting harder on the citizens.
The increase follows a proposal by the Electricity Company of Ghana (ECG) and the Ghana Water Company (GWCL) a few months ago. ECG proposed a 148% increase.
Tariffs would rise an average of 7.6 percent between 2023 and 2026.
According to the ECG, the proposed increase was a result of the gap between the actual cost recovery tariff and the tariff approved by the Public Utilities Regulatory Commission (PURC) and the cost of finished projects.
In a tariff proposal presented to the PURC, the GWCL also proposed an increase in tariff to enable it to recover its costs. Both utility companies raised concerns about the PURC’s refusal to adjust tariffs to match the cost of their production.
The ECG noted that “the financial sustainability of the electricity company of Ghana is important as it impacts on the entire energy sector.” With the huge investment needs facing the distribution industry over the next five years, it is expected that the proposed tariff increases would inevitably be approved to sustain efficient and reliable electricity service,” the ECG noted.
It continued: “Overall, this tariff proposal indicates a high increase (148%) in the year 2022 compared with the subsequent years’ increases of an average of 7.6%. This high increase in 2022 is largely attributable to the following:
The cost of investment projects; the gap that has developed over the years between the actual cost recovery tariff and the PURC-approved tariffs; the continual application of the prevailing tariff (which was a 14% reduction) beyond the stipulated regulatory period (2019-2020); and the effect of macroeconomic factors.
The GWCL also noted: “It must at least recover its costs if we are to sustain our operations. Over the years, however, the approved tariffs have not been “full cost reflective”.
“This has led to the inability of GWCL to raise enough revenue to finance the much-needed capital investment projects, with a consequent unsatisfactory level of service.”