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Opinions of Saturday, 3 July 2010

Columnist: Adomako, Appiah Kusi

Utilities: Paying Premium Charges For Poor Services

Appiah Kusi Adomako, Leaders of Tomorrow Foundation, Kumasi

The Public Utilities Regulatory Commission (PURC) has recently announced new tariffs for water and electricity. As usual, the new tariffs have generated debate in the public circles. Whilst consumers believe that utility companies does not merit any increase in tariffs the providers maintain that tariff increase is not an alternative but a must. Consumers are of the view that they have not seen any improvement of services as from earlier increases. The consumers have been lured to believe that increases in utilities prices would bring about quality and enhanced services, however, this has not been the case in this country. In many cases the consumers have been left disappointed. The regulator, PURC has not been helpful to the consumer. The Ghanaian utility consumer only knows the PURC when it comes to the fixing of tariffs but not when the utility providers are providing poor and discount services to consumers.

I do not want to escape the realities on the ground. At least some forms of investment are needed by the utilities companies to be able to operate on a good note. The question is who should pay for the capital investment?

International best practices suggest that if a business entity wants to improve its services, it does not levy its consumers or customers. Rather it goes to borrows money from bank to expand its operation. And when services are enhanced, it is this enhancement that plough back the investment. The ECG and GWC have taken consumers for jolly-ride. Almost every upward review of tariffs that they request are made on the pretense of buying equipment to improve their services, but it has become abundantly obvious that whenever they are granted their request, they are not able to deliver on their promises. Records have shown that the loan acquired by the state in the 1990’s for the utility companies did not improve their lot. A government of Ghana guaranteed loan facility of US $110.7 million to the Ghana Water Company and another US$ 143.1 million to the ECG alongside with colossal US $203.6 million to the ailing Ghana Railways Company (GRC) could not result in improvement of services. Later when consultants were appointed to review the performances of these companies it was concluded that ‘these companies do not have the ability to achieve their obligation’.

This tells us that something has gone wrong fundamentally with the operations of these companies. Again, this means that what is needed is not only fiscal investment but something different than what the companies are groveling for. To me I believe religiously that the utilities providers must not only look for money as the only means of improving their services as previous experience has told us, but restructure their operation-reduce waste and increase revenue mobilization.

A research has shown that about 49 per cent of water produced by the Ghana Water Company is either to theft or waste. And the remaining 51 percent that gets to consumers, the company is able to retrieve less than 50% of its revenue. The picture is not quite different from the ECG. If these companies are to zero in to reduce every vestige of waste and theft in their operation they would be able to make money for their services than to burden the consumer whom they have given them a low grade service for the price of a premium.

Experience gives eloquent testimony that there is a vast ocean of revenue leakages from the two major utility providers. I do not want to pretend that I know the channels of revenue leakages more than the utilities czars who made petition for increase in tariffs. For the first time since the establishment of the PURC, the PURC could have asked the ECG and GWC to go and chase its debtors, combat revenue leakages before the subject matter of any upward review of tariffs could be entertained. However, the PURC, bereft of ideas, could not think outside the box, but rather did the same usual thing-upward adjustment of tariffs.

What consumers are paying for their utilities are the function of the cost of producing the service plus revenue loss, waste and inefficiencies which have bedeviled these companies.

PURC: A CALL TO ACTION The Act of Parliament which established the PURC did not entrust the Commission in fixing of tariffs only but also as a REGULATOR. The question is: has the PURC done this work as it is expected of them? The answer to simply NO. I do not want to be tempted to say that the PURC, the government and the utility companies are in the same bed and sing from the same song sheet.

WHY CONSUMERS DO NOT FILE COMPLAINT AGAINST THE UTILITY COMPANIES.

I have seen many consumers who have had their properties or electrical appliances burnt or damaged as a result of unwarranted outages by the electricity company but have become reluctant in going to the court. Similarly, I have heard of people who have drunken unwholesome water pumped by the GWC and it has resulted in medical complications. It is not that the consumer does not know his or her right as consumer but because cases of such matters have seldomly been won in the courts of law. Those whom I have known to questioned the unprofessional acts by the ECG complains to me that the cases have taken a long time in the adjudication process and at the end the case is dismissed for lack of merit. A live in an area whereby my fluorescent tubes cannot light up in the evenings because of the limited supply of electricity voltage to the area.

WHAT ARE THE PERFORMANCE INDICATORS IN THE DELIVERY OF UTILITY SERVICES? The utility companies need to set performance target. The Ghana Health Service and the UN Millennium Development Goals for examples have set targets to reduce poverty to a certain level by the certain year 2014 and to increase primary school enrollment at the same.

Utility companies in this country are operating just anyhow and someone has said ‘ if you do not know where you are going anywhere could be your destination’. In a sense ‘anywhere’ whether pumping dirty waters to consumers or putting the light off more than ten times in a day has become the destination of our utility providers.

The ECG for example should be able to tell Ghanaians that with this increment that they are requesting they intend to 1. Reduce power outages from 40 in one month to 4 in a month 2. To give uninterrupted supply of services as long as they can 3. To inform customers through radio announcement, mobile vans, posters any planned activity that would sever supply to customers 4. To restore services in times of severe rain or accident within few hours

Similarly the Ghana Water Company should be to tell their Ghanaians that we intend to 1. Pump clean and treated water all time 2. To give interruptible supply of water 3. Inform customers in advance any planned engineering services.

CONCLUSION The consumer has no alternative than to pay for the new tariffs which have come into effect. However, It would be an insult to the integrity of the consumer if the he does not see any improved services. The PURC must rise up from their SLUMBER.

It is not just enough for government to subsidize utility tariffs for those in the lower income brackets but rather settle its arrears and give a strong policy direction for the utility companies to work to achieve for the collective interest of the country. The utility companies must know that what is needed is not money but delivering quality and efficient service. Reduce waste, combat crime, stop the revenue leakages and evolve new ways of collecting revenues because there is great ocean of untapped revenue which they have closed minds to.

Appiah Kusi Adomako, is the freelance writer and the president of Ghana Chapter of Leaders of Tomorrow Foundation. He can be contacted through: appiahkusiy2k@yahoo.com