Ghanaian News

All Eyes On PURC….

The Public Utilities Regulatory Commission (PURC) plans to announce new tariffs by the end of this month, but as to whether the tariffs will go up or down, only time will tell.

While government is promising reductions in electricity tariffs, utility companies are, on the other hand, seeking increases.

The utility companies cited foreign exchange losses as reason for seeking the increment, as most of their inputs are imported, in addition to other reasons such as bills paid in cedis and inflation.

The last tariff review was effected in 2015.

“From January this year, the non-residential tariff rate, which is the rate which includes all of you here, is being reduced by an average of 14%. For barbers, it is being reduced by 18%; for hairdressers and beauticians, 15.7%; and for tailors, 9.8%,” President Akufo-Addo said recently.

The Minister of Finance, Ken Ofori-Atta, in his presentation of the 2018 budget, indicated that tariffs would go down by 13% on the average for industrial users of power, in line with government’s plans to reduce the cost of doing business.

The Public Utilities Regulatory Commission is the final determinant of utility tariffs, and all eyes are on the commission.
ECG wants increase from 22 pesewas to 36 pesewas per kilowatt

In its presentation, the Electricity Company of Ghana, which is seeking 36 pesewas per kilowatt/hours from the current 22 pesewas, said an increase was necessary to enable it to meet its obligations to the generators of electricity.

Ebenezer Baiden, General Manager for Regulatory and Governmental Affairs, said an increased tariff would help meet operations cost, private power producers cost, fuel cost and other expenses.

NEDco wants 45 pesewas per kilowatt increase

Northern Electricity Distribution Company Limited (NEDco) is seeking over 200% increase in tariffs from 22 pesewas per kilowatt/hour to 67 pesewas per kilowatt/hour.

If approved, it would be paid by consumers in the Upper West, Upper East, Northern, Brong Ahafo, and parts of Western and Volta regions which are served by NEDco.

NEDco engineer, Dan Lardy explained that the company bought 125,000 prepaid meters, 200 distribution transformers, and upgraded its customer billing management system after 12 years.

The results of NEDco show that power interruptions decreased from 147.1 hours throughout the year 2016 to 116.5 hours in 2017.

Power was interrupted 132.4 times throughout 2017, an improvement from the 159.5 times in 2016.

NEDco faces significant challenges

Despite the improvements, Dan Lardy explained that NEDco faces significant challenges distributing power to its 823,000 residential customers because they are scattered over a very wide area.

It means more equipment is needed to transmit power over long distances just to serve small populations dotted around the regions.

To complement this task, NEDco had to buy 36 vehicles, 35 motorbikes and build 10 customer service centres to improve customer relationship.

Dan Lardy argued that the cost of sending power providing services is not commensurate with the revenues it makes from its work.

18% non-residential consumers generate 45% revenue

Providing data to back this claim, the NEDco engineer explained that the company makes more revenue from the 18% non-residential consumers, which bring in 45% of its income.

81% of residential consumers generate 45% revenue
But it takes 81% of residential consumers to generate another 45% of revenue, although this segment consumes 62% of power.

NEDco records 11.3% commercial loss

He put NEDco’s commercial loss for 2017 at 11.3%, a figure he described as high, and also expressed worry about hostile customers they face when collecting revenue.

NEDco also wants to build a befitting six-storey headquarters in Tamale for ¢36m and a regional office in Techiman in the Brong Ahafo region.

Dan Lardy said NEDco has budgeted 10% of its 2018 budget to start, at least, the foundation of the building, and is looking for other sources of funding.

NEDco made a loss of more than GH₵10 million after buying GH₵596 million worth of power.
Cedi depreciation wiped off GH₵100m
Operations cost for the year was put at GH₵550 million while a recurrent theme of cedi depreciation wiped off more than GH₵100 million.

NEDco raised GH₵79m
He said it planned to invest GH₵118 million in 2017, but raised only GH₵79m. If it does not raise funds to match its investments, the efficient power supply could decline.

Speaking at the meeting, Mrs Mami Dufie Ofori, the Executive Secretary of PURC, said the review was in line with the commission’s act, which empowers it to initiate the process for the examination and approval of electricity and water tariffs for 2018.

She said the PURC was providing a platform to listen to the views of all stakeholders, including the utility service providers, before taking a decision on the tariff.

The meeting is also to address issues of quality of service being rendered to consumers.
Already, government, a major stakeholder, has given indication that it was seeking, at least, a 13% reduction in tariff.
Ishmael Adjemkuhene, chairman of the technical committee of the PURC, said the consultative meetings were to reinforce the goal of tariff as a tool for development.

He said the PURC would consider all the proposals to enable it to strike a deliberate balance between the challenges being faced by the utility service providers and the consumers.

Ghana Water Company seeking tariff increase

On its part, the Ghana Water Company is seeking an increased tariff to enable it to expand coverage by making an annual investment of $400 million to be able to close the supply and demand gap.
The increased tariff, if granted, would also ensure the support for equipment and replacement of pumps and motors.

GRIDCo wants increase from 5 pesewas to 6 pesewas

The Ghana Grid Company is seeking an increase in its transmission charge from 5 pesewas to 6 pesewas per kilowatt hours to enable it to meet its fixed cost, as well as the variable cost.
Meanwhile, the Ghana Trades Union Congress said while it knew the importance of the tariff review, the PURC must ensure that it considered the proposals based on affordability and prudent cost.
Mr Kwabena Otoo, the GTUC representative, said the congress was expecting, at the conclusion of the review exercise, a 20% reduction in tariff.

The joint consultative meeting with utility service providers and stakeholders in Accra was to collate views on the proposed tariffs submitted to it by the various providers for their operations in the next two years.
The 2018 major tariff review has already commenced by way of soliciting inputs from all stakeholders of the commission and the public.

The commission has subsequently received proposals from the utility companies: Volta River Authority (VRA); Ghana Grid Company Limited (GRIDCo); Electricity Company of Ghana (ECG); Northern Electricity Distribution Company (NEDco); Ghana Water Company Limited (GWCL); Enclave Power Company (EPC); Ghana Chamber of Telecommunication, including the Government of Ghana.

Source: The Finder

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