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03.11.2006 General News

Government’s decision is shortsighted – Ex-BOST Boss

Government’s decision is shortsighted – Ex-BOST Boss
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There are indications the Public Utilities Regulatory Commission is sorely embarrassed over government's decision to absorb increases announced on utility tariffs.

The Commission's Chairman, Mr. Kwame Pianim, usually friendly and open to media enquiries, has since Wednesday evening refused to comment on the subject. He now directs callers to talk to the Castle for answers on the implications of the government's decision.

Pianim's Commission had on Tuesday announced 27 percent upward adjustment for electricity and 21 percent for water effective Wednesday, November 1st.

He also spent time on a number of radio stations to justify the increases, saying that consumers ought to pay realistic tariffs to enable the service providers deliver quality services.

Mr. Pianim argued that an alternative but long-termed solution to the perennial shortages in water and electricity supplies in the country would be to attract investments into the sectors and the best way to do that was to convince would-be investors that consumers were capable of paying realistic tariffs.

However a statement signed by the Chief of Staff and Minister for Presidential Affairs, Mr. Kwadwo Mpiani on Wednesday said while government accepted the PURC's view that there ought to be full cost recovery in the provision of utility services, government believed that the time was not ripe to pass the burden on to the consuming public.

Mr. Mpiani's statement explained also that it was in view of the relatively poor quality of supply of the utilities, particularly also with the current load shedding.

Finance Minister Kwadwo Baah Wiredu on Thursday asked consumers of utility services to bring pressure to bear on the service providers to ensure quality. He said in Accra that it was time that those providers sat up to deliver.

But a former Managing Director of the Bulk Oil Storage Transportation, Dr. Kwabena Donkor who spoke to Joy News, described government's action as unrealistic and shortsighted.

He said for the government to come out of the blue to absorb the cost after the Commission had studiously analysed the national requirement before coming out with the proposal, was very unfortunate.

He said the utility providers are seriously under-capitalised and the only way to get them to deliver quality service is to recapitalise them. He said the single major cause of loss to ECG is leakages from obsolete equipment which must be replaced through funding.

Dr. Donkor said it was not historically true that when government absorbs costs, it would readily pay the amount to the utility companies, and more importantly, “it is sending a wrong signal to the investment community.”

He explained that the country's energy requirement for the next few years is estimated at between 500 and 800 megawatts of power costing between 600 million and 800 million dollars to enable the country keep abreast with present development projections. He wondered how the country would get the needed investment if government continuously sent out signals that the nation was not capable of paying realistic prices.

He advised the government to have confidence in the calibre of people it has appointed to the PURC board and allow them to do their work.

But Information and National Orientation Minister Mr. Kwamina Bartels said Dr. Donkor's argument “does not hold water” since government's decision would rather ease the companies' troubles.

He said one of the difficulties facing the companies is tariff collection and since the decision would mean that the companies would have one central point to collect the money, it should rather ease their pains.

Mr. Bartels said there was no way the decision to absorb the cost should be a problem because it did not reverse the decision of the PURC, except that instead of consumers paying for the utilities, government had decided to pick the bill.

He said with the PURC being an independent body, government could not have stopped it from deciding on what to do but government maintained that the timing was wrong for the PURC to pass full costs recovery tariffs to the consumer.