Tarrifs increase…electricity up 59.2%, water up 67%

The Public Utilities and Regulatory Commission (PURC) on Monday announced hikes in both water and electricity tariffs at a combined rate of 126.4%, which has been criticised as counter-productive to business growth and sustainability.

The increase in utility tariffs, which will take effect from next week Monday, will see electric bills go up 59.2% while water bills will rise 67.2% at a time the input cost of businesses has risen shapely on the back of the erratic energy supply situation in the country, and a challenging macroeconomic environment in which businesses borrow at an average bank rate of 32%.

Incredibly, both consumers and managers of the utility companies were visibly disappointed when the tariff rates were announced; but the PURC says the increment result from balancing the interest of consumers and viability of the utility service providers.

The electric utility companies tabled a proposal for a 128.6% increase in energy consumption while the Ghana Water Company wanted 400.2% — requests that were seen as intentionally excessive since the PURC has always cut proposals brought before it by the utility companies.

Nonetheless, both the Association of Ghana Industries (AGI) and the Trade Union Congress have criticised the PURC’s decision — tagging it us ‘unwarranted’, since there is no indication of the availability of adequate power in the country to reduce the burden on consumers from the three and half year old load-shedding, which has come to be known as ‘dumsor’.

Last week, the much-anticipated 225megawatt Karpowership barge docked in Tema, which the Ghana Grid Company says has since been connected to the national grid, while the 250megawatts AMERI plant has also been connected — which the country’s electricity managers expect to reduce significantly the current energy supply deficit of almost 600 megawatts.

It has been estimated that the 225megawatt Karpowership will for instance use about 30,000 to 35,000 tonnes of Heavy Fuel Oil (HFO) per month, which translates into close to US$9million per October HFO (Rotterdam) price of US$254 per tonne.

The cost of solving the country’s energy crisis has been criticized, largely by the consumers who will be required to pay for the cost of generating electricity from the power barges, but the Power Minister says consumers should kiss the era of cheap energy goodbye and be prepared to pay more for energy consumption as a result of the shift from hydro to relatively expensive sources like thermal.

However, it is feared the increment in utility tariffs will cause inflationary pressures to heat up in the economy — especially in both the core food and non-food components — and further throw the government’s inflation target of 10.1 percent this year out of gear.

But Governor of the Bank of Ghana Dr. Kofi Wampah has assured that the central bank stands ready to further tighten the monetary policy regime to ward off inflationary pressures.