The recent 78.9% increment in electricity and 52% in water tariffs, though unbearable to many consumers, and practically counterproductive to private producers, an Economist at the University of Ghana, Legon, Emmanuel Nii Abbey, has backed the government over the tariffs hike.
He explained that; 'the increment has come at a time that we have little or no choice, given the last time such an increase occurred, and the need for us to act in the best interest of the nation, and to protect state institutions.'
Mr Nii Abbey was contributing to the heated debate on the cut-throat tariffs adjustment announced by the Public Utility and Regulatory Commission (PURC) about two weeks ago. The effective date for the increment is Tuesday, October 1, 2013.
He told the Business Chronicle in an interview in Accra: 'We must swallow this bitter pill now, and urge PURC to act cautiously the next time ... They must avoid such avoidable surges, and rather act in the best interest of both consumers and the utility providers, namely Electricity Company of Ghana, Volta River Authority, Ghana Grid Company Limited (GRIDCo), and the Ghana Water Company.'
Marginal increases will be appreciated by consumers, while increases on time will be appreciated by utility producers, Mr. Nii Abbey, who is also an Alumni of Thompson Foundation, UK, added.
When quizzed by the newspaper: 'But consumers are also complaining that the increase won't lead to enhanced service delivery,' he answered: 'Off course, such an increase is always unbearable to consumers, but let's look at the cost of production ... Crude oil instead of gas ... With the West Africa Gas Pipeline still not operational, the depreciation of the cedi, and other operational expenses are having toll effects on the electricity utility providers. So, we (consumers) want the utility we are already enjoying to be sustainable and improved upon, we must therefore pay more.'
To this end, the young Economist urged the utility providers to plug the many loopholes, leakages, and transmission losses, among others in the system, to enable them provider quality services to the consuming public.
But the utility providers also need to block leakages in their production, so they can generate enough revenue to shore up their cost of production in the future, and avoid transferring all such costs onto consumers, the Legon Economist added.
Mr. Nii Abbey was quick to note: 'While this will take time, they will generate enough revenue that to, some extent, will prevent such surges in the future.'
On whether the recent tariffs increases could have some repercussions on the Ghanaian economy, especially inflation, he answered in the affirmative.
Explaining; 'that it is going to affect many economic indicators not just inflation ...
Practically we have no choice ... To support the hike, though I acknowledge it is too much, it is unbearable and counterproductive. But it's a bitter pill we will someday swallow, and it is better we do it now.'