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08.02.2010 General News

Higher energy tariffs demand on hold

By myjoyonline
Higher energy tariffs demand on hold
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The Public Utilities Regulatory Commission (PURC) has confirmed that all the three firms involved in the generation, transmission and distribution of electric energy in Ghana have submitted proposals for a total 437 per cent increases in tariffs.

While the Volta River Authority (VRA), which generates the energy, is asking for a 155 per cent increase, the Ghana Grid company (GridCo), which undertakes the transmission of power to the Electricity Company of Ghana (ECG), which in turn does the distribution to consumers, is asking for a 173 per cent increase, with the ECG asking for a 109 per cent increase.

But the PURC says it has put the demands on hold as it raises other issues, including the question of efficiency, the absence of which the public should not be made to suffer.

Commenting on the proposals, the Executive Secretary of the PURC, Mr Stephen Adu, said in 2007, the commission granted a 35 per cent tariff increase to the VRA but wondered whether that had reflected in efficient service.

He said last year, for instance, the VRA promised that in six months power outages would be a thing of the past but that did not happen and the public was not happy with the situation. He said since then there had been a series of load shedding exercises, with the most affected being the vulnerable, although for some time now the Volta Lake had had a good water level.

Mr Adu said although the commission appreciated some of the difficulties in the electricity sector, it believed that the way the service providers went about asking for increment in tariffs was wrong and cautioned that the fact that a utility company submitted a proposal and embarked on a campaign for public support did not mean that it would be granted.

He admitted that at the time of granting the increment in 2007, the cedi was almost at par with the dollar but the cedi had now depreciated against the dollar. However, the depreciation of the cedi, coupled with other operational difficulties, rather called for recapitalization, since tariff increases alone could not solve the problem, he noted.

He said without recapitalization to put the VRA on a balanced sheet, nothing would stop the authority from running into losses. He warned that as soon as those tariff increases were granted, the Ghana Water Company would also ask for an increase in tariffs because the water company depended on electricity to pump water from its treatment plants to consumers.

He said the proposals would be reviewed on their merits and demerits during a public hearing to determine whether the increment, if granted, would be justifiable.

Mr Adu said the 155 per cent increment proposed by the VRA was a huge jump, compared to the 35 per cent granted it in 2007, hence sufficient explanation was needed from the authority on the issue. He explained that in 2007 the PURC had granted the VRA a 35 per cent increase in tariffs with the agreement that the authority would generate 65 per cent of power from hydro and 35 per cent from thermal but that was not to be, as the VRA instead generated 75 per cent of power from hydro, which was very cheap, and 25 per cent from thermal.

He said what that meant was that the VRA had made enough money, since it did not generate the agreed 35 per cent from thermal but only 25 per cent. He said because the VRA and the PURC had agreed that 35 per cent of power would be generated from thermal and the remaining 65 per cent from hydro, the commission granted the VRA a 35 per cent increment.

Mr Adu said the PURC took into account the fact that the Takoradi Power Company (TAPCO) would be put to effective use to generate power. He said that was never done and instead the VRA generated thermal power from the Takoradi International Company (TICO), which was very expensive.

Source: Daily Graphic /Ghana

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