PURC increases water and electricity tariffs by 21% and 27.15% respectively
The Public Utilities and Regulatory Commission (PURC) has today 15th August, announced a 21% increment in water tariffs and a 27.15% in electricity tariffs.
These new tariffs will take effect this on 1st September 2022.
It is revealed that management of the Ghana Water Company (GWCL) proposed to the PURC to increase water tariff. The GWCL in their proposal stated that over the past years, the approved tariffs have not been full cost reflective, which led to the inability of GWCL to raise enough revenue to finance the much needed capital investment projects, with an unsatisfactory level of service.
“Below are some major issues which have prevailed since the last tariff adjustment, and which have necessitated this review. Inadequacy of tariff to carry out urgent repairs of assets and minor extensions Unlike the previous years where the Automatic Tariff Adjustment Formula (ATAF) has been applied every quarter, PURC has not applied it for some time now.
“In real terms the average tariff per cubic meter in 2019 was USD 1.27, but has reduced to USD 1.13 as a result of the cedi depreciation over the period as shown in the figure below.
“This has affected our ability to carry out repairs and replacement of aged and obsolete equipment and pipelines, and other critical assets as would be expected and has given rise to high levels of NRW. As part of this proposal GWCL has included measures to reduce NRW for the consideration of PURC.
“The PURC should also play a significant role in making water services available to low income dwellers in the country through the review and approval of a ‘GWCL Low Income Distribution Extension Fund’. The terms which should cover this arrangement would be that GWCL shall extend pipelines to low income communities and new consumers.”
“Among the urban poor, water can be a critical resource in short supply. GWCL has therefore set up a Low-Income Customer Support Department (LICSD) to deliver improved services to targeted low income urban poor areas. The Government of Ghana is committed to expanding access to safe water supply services in urban areas with particular focus on improving water production and expansion of distribution systems and ensuring sustainable financing of the sector. It is estimated that about $2billion will have to be invested in water production to help increase current urban coverage to 100% country-wide by 2025” the proposal stated.
It added that “notwithstanding the challenges mentioned above, it is important to consider the broad sectoral focal areas that impact on water operations. These include sustainable water sources, access to potable water, sustainable financing, improved public private partnerships, capacity building, good governance, good research and development, monitoring and evaluation, water safety and customer interest/education”.
GWCL therefore called on the Regulator, the PURC, to provide every necessary support to enable them turn things around.
Similarly, the Electricity Company of Ghana initially proposed a 148% increments due to Distribution Service Charges. “The result of ECG’s tariff proposal for the next five years shows an approximately 148% increase on the current DSC1 in 2022 and an average increase of 7.6% year on year from 2023 to 2026. “The high increase in the DSC1 for year 2022 could be attributed to the gap that has developed over the years between the actual cost recovery tariff and the PURC approved tariffs as well as the cost of completed projects,” part of the statement read.
Based on this, the PURC increased both water and electricity tariffs to a 21% increment in water tariffs and a 27.15% in electricity tariffs.
By: Agaatorne Douglas Asaah | myactiveonline.com
