The Association of Ghana Industries (AGI) has registered its dissatisfaction at the level of increment in the last major utility tariffs review for the beverage sector under Industry.
According to the association, it appreciates the changes in the key determinants in tariff fixing and therefore reasonable changes in tariffs do not come as a surprise. However, it has called on the Public Utility Regulatory Commission (PURC) to maintain its beverage sector companies in their Industry category which has also seen an increment of 48% in water tariff.
AGI expressed that it is looking forward to further engagement with the PURC and the Utility Service Providers in the coming days.
“With the foregoing, AGI is calling on the PURC to maintain its beverage sector companies in their Industry category which has also seen an increment of 48% in water tariff. We believe Industries are a high-revenue customer for GWCo and deserve equity in the water pricing we see. We urge the Government to help stem the tide of our macroeconomic instability, which is a major trigger for some of the changes in tariffs levels and price hikes.”Association of Ghana Industries
The AGI indicated that despite appreciating the review, the “principle of equity” was largely missing in the major tariff review conducted in August last year for water, where a particular customer category was being asked to bear a 316% increment in a single tariff review.
It acknowledged that the beverage companies under Industry have always belonged to the Industry category of water users. However, surprisingly, the last major tariff review in August 2022 saw an introduction of a new end-user category, Commercial Bottled Water and Drinks, which is quite alien to the PURC gazette.
AGI explained that the increment for this new consumer category alone was 316%, over and above the 21% average increment reported for water.
“This is the new category our Beverage companies within Industry are being unfairly re-assigned. We acknowledge the water tariff reduction from the 316% (Ghc45.94/1000 litres) to 172% (Ghc30.00/1000 litres) subsequent to our meetings with the PURC but this is still unbearable.”Association of Ghana Industries
The association noted that it does not think the creation of a new Consumer category addresses the challenges in the country’s water distribution system. It highlighted that such astronomical tariff increment in a single revision is retrogressive and shows no empathy for Ghana’s ailing industrial sector.
“We all need to wake up to the looming collapse of our local industries which hold the key to job creation and our economic recovery. The AGI reiterated that a tariff increment of 316% and subsequently 172% for its beverage sector under Industry will have dire consequences for Industry and the Ghana Water Company (GWCo).”Association of Ghana Industries
Impact of PURC’s tariff increment on businesses
Highlighting the dangers of such increment, the AGI emphasized that the utility companies risk losing revenue if this trend ends up collapsing companies. Owing to this, it explained that PURC’s significant demand of share of revenue from industries is unfair, as their cost of service is cheaper.
“We urge the PURC to make public the real cost of service for each consumer category to engender transparency and fairness.”Association of Ghana Industries
Again, the AGI highlighted the48% increment in water tariffs for Industry effective this February, which is a significant deviation from the 8% average increment as announced. It noted that within a period of less than six months, electricity tariffs have also shot up significantly on two occasions, 26.6% in September 2022 and 29.9% for this quarter, totalling a whopping 56.5%.
“Industries have been under pressure from an unstable business environment. Hoping to see signs of recovery this year, the situation is further worsened by this utility tariff increment, inflation at 54.1%, VAT at 21.9%, fuel prices inching up, and threats of excise duty increments, which pose a serious threat to employment prospects and survival of businesses.”Association of Ghana Industries
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