Utility providers want over 200% tariff increase

• Posted on October 13, 2015October 13, 2015
• by Nana Kwesi Coomson
• Comment

Ghana Water Company Lim­ited (GWCL), Volta River Au­thority (VRA), Electricity Company of Ghana (ECG) and the Ghana Grid Company Limited (GRIDCo) are seeking tariff in­creases that amount to over 200 percent.

GWCL is seeking 124 percent increase in its tariff from GH¢1.78 for 120 gallons of water (5 barrels) to GH?4 for 120 gallons of water.

When the increases being sought by ECG, VRA and GRIDCo are computed together, it will increase electricity tar­iff from 44-50 pesewas per kWh to 102-99 pesewas per kWh.

For electricity, ECG is seeking 101 percent increase; VRA wants 108 percent in­crease while GRIDCo seeks 31.26 percent, and if the three are computed it will re­sult in over 100 percent increase in electric­ity tariff.

The Public Utilities Regulatory Commission (PURC) is to scrutinise the proposals and determine what in­creases the utility providers deserve.

VRA has proposed that its current Gh14.6 pesewas per kilowatt hour of power generated should be increased to Gh30.34 pesewas, representing 108 percent in­crease.

On the other hand, ECG is seeking approval from Gh16.45 pesewas to Gh35.5 pesewas per kilowatt of power while GRIDCo wants its Gh4.0453 pesewas per Kilowatt hour of electricity increased to Gh5.31 pesewas per kWh, an increase of 31.26 percent.

At the first stakeholder engagement organised by the PURC on major tariff reviews, which takes place every two years, ECG, VRA, GRIDCo and GWCL explained why they needed increases.

Kofi Ellis, Planning and Busi­ness Development Manager at the VRA, in a presentation, listed some projects aimed at adding more megawatts to the national grid in the short term.

He noted that by the year 2030, de­mand for electricity could rise to 5,000 MW in a case of low demand while high demand situation could rise to 9,000MW.

He explained that total power to be generated by Independent Power Pro­ducers (IPPs) that have shown interest in Ghana’s power sector amounts to 5,699MW.

He noted that the current tariff lev­els are not attractive enough to the IPPs.

According to him, it costs Gh26 pese­was to buy fuel to generate one Kilo­watt hour of electricity while Ghanaians currently pay Gh14.6p per kWh.

Mr Ellis therefore said Gh30.34 pe­sewas per kWh was necessary to enable VRA cover the cost of producing power.

Ebenezer Baiden, member of ECG tariff team, also explained that var­ious projects are being undertaken to im­prove its operations.

He said the increase was needed to enable ECG serve customers better, adding that as of June this year, ECG had recovered GH?95 million of its debts.

He said the company is determined to collect all its debts.

The ECG tariff member stated that ECG has in­vested GH?1.45 billion into major projects across it operational areas to improve service delivery.

He stated that ECG needed the in­crement to enable it pay for power pur­chases and the cost of existing and new power plants.

Kofi Owiredu, an economist at GRIDCo, outlined the numerous proj­ects being undertaken and explained that the company had taken loans and needed the increases to be able to pay back the loans.

Responding to questions on the power badges, he said work was nearing completion.

Kenneth Ennin, Commercial Manager of GWCL, said GWCL needs GH¢698 million per year for expansion projects.

He explained that it costs GH¢8 to produce 120 gallons of water (5 barrels) but GWCL sells that water for GH¢1.78, making operating cost exceed tariff.

According to him, 48 percent of their revenue goes into paying electricity bills because their stations operate 24 hours.

The pollution of raw water sources by illegal miners means the company has to use more chemical to threat the water, resulting in high cost of operations, he mentioned.

This, he said, is also destroying their pumps because highly polluted water cannot be treated by their machines.

– Myjoyonline