Soften your stance on tariffs; Terkper tells AGI

Finance Minister Seth Terkper on Wednesday called for "moderation" on the part of industry regarding their “we won't pay” stance on utility tariffs, saying: "A reasonable tariff makes sense for all of us".

The minister, who was speaking at the Annual General Meeting of the Association of Ghana Industries (AGI), said fixing tariffs below the cost of production of utilities "hurts all of us" and urged the AGI to bear with the PURC as it works out new tariffs for water and electricity.

"Reasonable tariffs," he said, are necessary because among other things all the gas projects that are being pursued -- Jubilee, TEN, Sankofa -- are not meant for export but power generation locally, and so the investments must be recouped.

Both the Association of Ghana Industries (AGI) and Organsied Labour recently issued statements saying any tariff hikes will worsen already precarious socio-economic conditions in the country.

On November 3rd, when it released third quarter results from its Business Climate survey, the AGI said businesses continue to reel under enormous pressure from exchange rate volatility, electricity shortages and high cost of credit, and so they cannot be further burdened with utility price hikes.

“Businesses are not ready for tariff increases,” AGI president, James Asare-Adjei, said. “The AGI believes it is about time consumers demanded value for money and efficiency in service delivery by the utility companies.”

Organised Labour also told the PURC recently that Ghanaians are already paying heavily for the “poor macro-economic performance and the technical and operational inefficiencies of the utilities”, and so should be spared the tariff hikes.

“As representatives of workers, we are worried about the ever-increasing utility tariffs which do not match the rate of increases in incomes,” said the letter, which was signed by Dr. Yaw Baah, Acting Secretary General of the TUC.

The utilities have raised a number of concerns -- including cedi depreciation, the shift to relatively expensive thermal generation, and the huge web of debt that entangles the power sector -- as the reason they must be given a hundred percent raise in tariffs.

Main power generator VRA argues that its tariff has remained unchanged at 14.6047 pesewas since January 1, 2015 -- although the cedi has depreciated considerably over the period.

It is thus asking the PURC for a tariff increase from 14.6047 pesewas/kWh to 30.34 pesewas/kWh to enable it meet direct operating costs.

The ECG has asked for an increase from 16 pesewas per unit to 30pesewas, while the power transmitter, GRIDCo, is also asking for a lower rate of increase from 4 pesewas per unit of transmission to 5 pesewas.

The Ghana Water Company Limited, on its part, is asking for a 124 percent tariff adjustment from GH¢1.70 per cubic metre to GH¢4.00.