26 June 2014

Ghana: Electricity, Water Tariffs Go Up

The economic hardship confronting the country is expected to further compound following the announcement of a 12.09% and 6.1% increase in electricity and water tariffs by the Public Utility Regulatory Commission (PURC) yesterday. The tariffs increase, according to the PURC, takes effect from July 1, 2014.

The regulating agency, after deliberating on implementation of the 3rd quarter Automatic Adjustment Formula arrived at an adjustment figure of 31.56% for electricity and 14.30%. But the Director of Public Affairs at the PURC, Nana Yaa Gyantuah, in an interaction with journalists, said the Commission decided not to pass on the current increase but rather implement the second quarter tariffs which were deferred due to the economic situation of the country.

"The Commission is certainly aware of the current challenges consumers are facing with the provision of electricity and water and that is why the Commission has decided to implement a much lower percentage which is the previous tariff for the second quarter for year 2014", noted Chairman of the PURC, Dr. Emmanuel K. Anna, in a statement released in Accra. He added: "The Commission wishes to emphasise that a tariff increase at this moment is only meant to maintain the strength of the existing electricity and water tariffs which have been affected in value by the Ghana Cedi to the United States Dollar Exchange rate."

The Automatic Adjustment Formula is a Tariff Mechanism that tracks and incorporates movements in key determining uncontrollable factors to reflect the cost of electricity and water every quarter. The increment in the tariffs, the Commission argued, was underpinned by the following variables; Ghana Cedi against the US Dollar Exchange Rate; Inflation; Price of Crude Oil and Natural Gas; Fuel Mix (Light Crude Oil and Natural Gas and Distillate Fuel); Generation Mix (Hydro and Thermal) and Power Purchase Cost.

The others include; Demand Forecast (Currently 12% per annum and still rising); Chemical Cost (Water); and Electricity Cost (Water). According to the Commission, without a marginal tariff increase, the current load shedding situation could not be sustained and the "situation might worsen". It said it would keenly monitor the current electricity and water situation with a view to ensuring that within the current challenges, the interest of all consumers would be protected.

The Public Utilities Regulatory Commission has announced a 6.1 percent increase in water tariff and 12 percent in the tariff for electricity. The hike is expected to take effect from July 1, 2014. The utilities regulator is expected to officially announce the increment today. Director of Public Affairs at the PURC, Nana Yaa Gyantuah early on told Joy News' Evans Mensah on Wednesday afternoon that an initial 31 percent hike in electricity and 14 per cent hike in water had been agreed at management level but said the proposal had been forwarded to the Board of the Commission for approval.

She told Evans Mensah the Board members were meeting to consider the new proposal, adding the public must "expect an increase" irrespective of whatever the decision the Board will take. After the crunch meeting, the Board members insisted that the second quarter proposal- 6.1 per cent for water and 12 per cent for electricity- which was held in abeyance as a result of the continued load shedding crisis should rather take effect instead of the third quarter proposal brought by management.

It would be recalled that the PURC failed to adjust tariffs in the second quarter which coincided with a severe load shedding exercise. The commission therefore decided to suspend the increment then. Pondering over the proposed third quarter increment, the Board concluded that instead of imposing the increment it would rather implement the second quarter increases.

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