fbpx

PURC directs utility companies to justify demand for tariff increase

BY: Kwadwo Baffoe Donkor

The Chairman of the Technical Committee of the Public Utilities Regulatory Commission (PURC), Mr Ishmael  Agyekumhene, has asked the utility service providers to convincingly justify their demand for tariff increment.

He said the high cost of operations and exchange rate which the service providers had adduced as grounds for the increases were not compelling enough.

Mr Agyekumhene, who was speaking to the media after a public forum organised by the PURC on the 2019 tariff review, explained that before the tariff reductions of last March, the service providers advanced the same excuses for an increase in  tariffs.

He said even though the exchange rate had changed since the last tariff adjustment, the service providers would need to furnish the PURC with more convincing reasons than just using economic conditions for their demand.

The forum was to enable the service providers to table their proposals before the stakeholders for consideration.

Ghana News Headlines

For latest news in Ghana, visit Graphic Online news headlines page Ghana news page

Factors

Mr Agyekumhene said the PURC considered a number of factors before agreeing to upward tariff adjustments, saying that the exchange rate alone would not be enough justification.

He indicated that a key factor which the PURC took into consideration before approving new utility tariffs was the level of efficiency of the service provider.

He said the commission was still scrutinising the proposals submitted by the utility service providers and would evaluate them and come up with appropriate new tariffs.

Proposals

The Electricity Company of Ghana (ECG), which is ceding its distribution function to another company, Power Distribution Ghana Limited, effective next month, is seeking an upward review of its tariff to enable it to undertake more expansion work.

According to the company, last year it undertook a number of expansion works, especially in the Ashanti Region, where it spent about $120 million to provide reliable power supply for its customers.

The ECG is, therefore, asking for 23Gp per kilowatt hour (23p/kWh) for its tariff for this year.

NEDCO

The Northern Electricity Distribution Company (NEDCO), for its part, complained of making losses even before the downward review of tariffs in April last year.

The company is, therefore, proposing 43p/kWh to enable it to raise enough revenue to meet the cost of production.

According to the Corporate Affairs Manager of NEDCO, Mr Maxwell Kofi Kotoka, the company was making losses, as it was selling power to its customers below the cost of production.

Besides that, he said, about 90 per cent of its customers were residential based and as such it was not making as much revenue as the ECG, which has a lot of commercial consumers.

Ghana Water

The Ghana Water Company Limited (GWCL), for its part, is demanding an upward review of its tariff but has not proposed any figure yet.