The Director of Regional Operations at the Public Utilities Regulatory Commission (PURC), Alhaji Abukari Jabaru has justified the upward review of tariffs despite the worsening cost of living.
He explained that every tariff has a control period and the last control period of the Commission had expired.
“The last tariff had a two-year control period but had expired and because it had expired they [utility companies] were obliged to submit a proposal based on the guidelines that were submitted to them”, he emphasized.
The PURC announced a 27.15% increase in tariff for electricity and a 21.55% increase in water tariff effective September 1, 2022.
This comes after utility companies including the Electricity Company of Ghana and Ghana Water Company Limited proposed an increase in tariffs by 148% and 334% respectively.
Speaking in an interview, Alhaji Abukari Jabaru alluded to the fact that based on extensive consultation, the commissioners decided to have the tariff plan from 2022 to 2025.
Alhaji Jabaru disclosed that both Parliament and the Executive were briefed prior to the tariff adjustment and maintained that the Commission was an independent company and was not subject to any interference.
However, the Minority in Parliament has asked the government to cushion Ghanaians against what it calls “worsening poverty levels”, following the announcement of the increment.
The Minority in a statement said the free fall of the cedi and rising inflation rate emphasize the need for government to consider reducing the rate of increments for utility tariffs.
“We are of the strongest conviction that Government can and must do something to cushion Ghanaians who are going through unimaginable hardships with ever-worsening poverty levels under the Akufo-Addo/Bawumiah-led government.”
“The country is already reeling under a galloping inflation estimated at about 32% thus, this utility tariffs increment will only exacerbate the current high cost of living and will thus worsen the plight of the already impoverished Ghanaian,” portions of the Minority’s statement signed by the Ranking Member on the Mines and Energy Committee, John Abdulai Jinapor said.
The Minority claimed that the hike in electricity tariffs was more than what the PURC had announced.
“Firstly, we wish to debunk the misleading conclusion that the PURC has increased the electricity tariffs by 27% for all consumers. A critical look at the tariff structure as announced reveals that all residential consumers who fall between 0-300 kWh bracket have witnessed a price increase from GHp/kWh 65.4161 to GHp/kWh89.0422, representing an increment of almost 34%.”
“We are of the strongest conviction that Government can and must do something to cushion Ghanaians who are going through unimaginable hardships with ever-worsening poverty levels under the Akufo-Addo/Bawumiah-led government”, it stated.
They recalled that following the major tariff review in 2016, the NDC Government intervened, resulting in a reduction of the rate of increment by close to 50%.
Meanwhile, the Chairman of the Greater Accra Regional branch of the Association of Ghana Industries (AGI), Tsonam Cleanse Akpeloo, has expressed concerns over the upward review of utility tariffs in Ghana.
According to him, the timing of the adjustment was worrying and will worsen the plights of local industries.
Mr Akpeloo in an interview called for ways to reduce costs in the production process, which he said include utility and hinted that electricity constitutes about 30% of the entire production cost.
“An increase in such a significant item will affect the cost of the production process. If the cost of production continues to go up, there is very little we can do to push the cost to the producer,” he said.
“A country that apparently imports everything including newspapers makes it very difficult for local industries to thrive, thus the increment of tariffs would compound the woes of the industries”, he lamented.
He, however, suggested that the increment could have come at a time when the cedi would be more stable and the economy exhibits favourable business conditions.
“The general economic environment is not conducive for industries, looking at the rate at which the cedi is depreciating. This makes it difficult to plan for anything in the industries. The industries are already faced with a situation of always going to the tables to renegotiate,” he intimated.