Ghana: Group Welcomes Hikes In Electricity And Water Tariffs; Says It Could Have Been Worse

A civil society group— Coalition of Stakeholders in Electricity Concession and Arrangements (COSECA)—in the Republic of Ghana has welcomed the increment in electricity and water tariffs announced by the country’s utility regulator, Public Utilities Regulatory Commission (PURC).

According to the group, the increases in electricity and water tariffs would save the situation, stating that it could have been worse.

The PURC, on Monday 15th August 2022, announced a 27.15 per cent and 21.55 per cent increment in electricity and water tariffs respectively.

This is expected to be implemented by the utilities from 1st September 2022.

In a statement issued and signed by Dr Steve Manteaw on behalf of the group, COSECA noted that although the Association of Ghana Industries (AGI) and Ghana Hoteliers Association have complained about a potential negative impact of the tariff on their members’ operations, their analysis shows that the new tariff regime is more business-friendly than the previous tariff regime.

Citing paragraph 6.5 of the PURC’s publication of electricity tariffs published on 16th December 2020, which states: “The distribution service charges (DCS) provided in the third schedule are the rates applicable to the distribution of electricity by DISCO from 1st January 2021 as follows: a. DSC 1 is the rate for DISCos to recover the cost of distribution network operations. b. DCS2 is the rate for DISCos to recover distribution losses,” the group alleged fraud in depriving ECG of this vital revenue stream that would have allowed it to operate efficiently without requiring as much as the 148 per cent increase in tariff.

From the group’s calculations, the restoration of DSC-2 would automatically translate into a reduction in water tariffs, as electricity constitutes about 30 per cent of the cost of producing water.

“Our checks have revealed that the DSC-2 has been restored as part of the current major tariff review exercise, and this might have formed the basis for the reduction in ECG’s requested hikes in tariffs.”   

While COSECA welcomed this development, it believes the newly announced tariffs for water and electricity could come down or go up during the quarterly automatic adjustments, if other concerns raised in its press statement of 2nd June 2022 are addressed.

COSECA also noted with concern the non-residential customer classification of 0-300kwh.

This classification affects Small & Medium Scale Enterprises (SMEs) such as hairdressing salons, barbering shops, beauty parlours, tailoring and dressmaking shops, welding, mechanic shops, vulcanizing and carpentry workshops.

The current customer classification systems of ECG, NEDCo and ENCLAVE power, per the above PURC categories, cannot differentiate them from non-residential customers and potentially could see them pay very high tariffs which could drive them under the current economic conditions.

This needs to be urgently addressed by both the PURC on one hand and the power distribution companies on the other.

“COSECA has some solutions we are willing to bring to the table to help address this problem to ensure SMEs do not suffer unduly due to high tariffs.

“We are open to further discussions on this matter before the 1st September implementation of the new tariffs,” it said.

The additional measures COSECA wants to be implemented are investments into efforts at reducing commercial losses, effective revenue collection initiatives, curtailment of political interferences in the affairs of the companies, especially in the procurement activities of ECG; improvement in the government’s management of the macro-economic performance indicators, and taking the fight against illegal mining (Galamsey) and its consequential pollution of water bodies more seriously, as it has led to an increased cost of water treatment for GWCL.