The Public Utilities Regulatory Commission (PURC) says its decision to put a halt to the astronomical increase in tariffs every few years and also reduce debt influenced the implementation of quarterly adjustments of tariffs.
Speaking on PM Express on JoyNews, the Executive Secretary for PURC, Dr Ishmael Ackah stated that previously there has been up to 89% increase in tariffs during a major tariff review.
This, he stated, is because at the end of the three years, when a tariff review is implemented, factors like inflation and cedi depreciation within that period affect the adjustment.
“When you look at the exchange rate, we use 7.5 for the major tariff. Look at the exchange rate now, if we don’t do anything at all about it by 2025 and let’s say it’s even 12, the increase in the exchange rate alone can push the tariff there to more than 10 times what we are experiencing now.”
“So the board decided that why don’t we have a way of at least adjusting it small, small so that when we get to the major tariff, there any change may not be that much,” Mr Ackah said.
As such, if there will be any change at all it should be quite marginal and not a shock to the general population adding “…so every quarter, whatever it is, we should do it,” he explained.
On debt, he noted the IMF, during the negotiations also recommended, a consistent implementation of the quarterly adjustments stating that it would help the energy sector not pile up debts.
“…so that if there are any financial gaps when you implement it, at least it helps pay. So we don’t go to 2025, say, energy sector debt is this, and the government may have to introduce taxes and so many other things,” Mr Ackah said.
This comes after PURC announced an increase in electricity and water tariffs by 4.22 % and 1.18% respectively, effective September 1, 2023.
A statement issued by the PURC on Tuesday, August 22, 2023, noted that “The Commission however approved a 4.22% increase across board in the average end-user electricity tariff for non-lifeline residential customers.”
It added, “For the average end-user for water, life-line customers will experience no increase or change in tariff. The Commission however approved a 1.18 % increase in tariff for all other water customer group”.
Meanwhile, Mr Ackah believes that Ghana stands a chance of having its utility tariffs reduced and not increased per usual.
For this to be achieved, he said the exchange rate and inflation rate must remain stable or experience a drop in its figures.
“So our hope is for the exchange rate to remain stable or even fall if possible. Inflation would remain stable or even if it will go up, not so much like the June level. If some of these things happen, we will reduce the tariffs,” he said on JoyNews’ PM Express.