24.08.2006 Business & Finance

PURC Abolishes Quarterly Review Of Tariffs

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The Public Utilities Regulatory Commission (PURC) yesterday said it had decided to abolish with immediate effect the quarterly automatic adjustment of tariffs in line with the Energy Sector Reform Programme.

Consequently, utility companies seeking tariff adjustments are to apply to the Commission with detailed explanations justifying such request.

Mr Kwame Pianim, Chairman of the PURC, who announced this in Accra, said request for reviews would be considered taking into account changes in allowable legitimate costs, external developments in the global energy industry and the operational exigencies of the utility companies.

In addition, quality of service and value for money for the consuming public and the financial soundness of the utility companies would be borne in mind in any such review exercises.

Mr Pianim said it was well understood by stakeholders that once the quality of utility services began to improve, consumers would be asked to pay a tariff that would reflect the need to keep the utility companies financially sound and give consumers value for money.

It is in this connection that the PURC had decided not to pass on to the consuming public new tariffs that should have taken effect from August 1, 2006.

The Commission adjusted the Average End User Tariff for Electricity for August at 10.98 cent per kilowatts from 9.70 cent, which became effective on May 1, 2006. Similarly, price for water for domestic users was raised from 88 cedis for consumption from 0-20,000 litres per month and above 20,000 litres per month at 124 cedis.

Mr Pianim explained that the decision not to pass on the tariffs to consumers was taken because efforts being made by the utility companies to halt the decline in quality of service for the supply of water and electricity were not adequate enough to warrant a tariff adjustment.

However, the Commission would continue to monitor developments in utilities and as quality of service improved, tariff would be adjusted accordingly, Mr Pianim said. He said PURC was also monitoring movements in the agreed upfront activities that were being implemented and the Government's efforts to organise the major investments required to finance the projects.

Mr Pianim said the Government was making good its promises to provide financial support to the utility companies to stabilise the quality of service delivery while arranging to secure 1.5 billion dollars over the next five years to revitalise the utility systems.

As part of the intervention, the Government absorbed the tariff that became operational on May 1, to save the consumers from the debilitating effects of the increases.

Consequently, the Government ended up paying 22 million dollars to the utility companies in lieu of the high tariff increases. He said the Government had also made various provisions to the energy and water sectors in the Supplementary Budget.

These are 311 billion cedis for the energy sector for the construction of a third bulk supply point in Accra, acquisition of prepaid meters for ECG and rehabilitation of generation equipment for VRA and a sum of 182.9 billion cedis to finance the construction of Accra East-west Loop to help to stabilie the flow of water in Accra.

Mr Pianim said the existing structures did not provide conditions for equitable access to both electricity and water. He, therefore, stressed the need for a concerted effort by all stakeholders to make contribution to ensure planned and sustainable improvements in the quality of service.

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