Regional director of CUTS International, Appiah Kusi Adomako, has expressed his disappointment in the tariff increment by the Public Utility Regulatory Commission (PURC), describing it as ill-timed.
According to him, the position taken by the Commission will adversely impact Ghanaians and businesses in ways unimaginable. He stated that although there are legislations in place for the Commission to review prices quarterly the move does not bode well for Ghanaians.
“We consider the action by PURC in increasing the tariff this time to be ill-timed… When you look at what has happened for the past six months towards the end of last year around October – a major tariff increment took place and in February another review also took place. Now in May, another new tariff which is not even under 5%, we are looking at 18.36%, which is significant.”
Appiah Kusi Adomako
Mr Adomako contended that the metrics used by the Commission did not factor in other key variables it could have used to avert an increase in tariff. He explained that the fact that inflation has dropped over the last three months, coupled with the health of the cedi which has also begun to “see some glory again”, likewise the success of the IMF deal, should have been enough to avoid an upward review in tariff.
“When you look at the reasons which were advanced by PURC, two major factors – the cedi/dollar rate and cost of gas. We know that these two variables have gone up but PURC did not talk about the other things that could have also come down. When you look at the econometric regression that they used to estimate the prices, there are lots of variables including the interest rates and inflation, internal rates of capital, internal rate of return and also the rate of inflation…”
Appiah Kusi Adomako
Impact of tariff adjustment on businesses
Commenting on the impact of the consistent increment in utility tariff on businesses, Mr Adomako revealed that this could derail the businesses of most people in the country. He stated that currently, more than thirty businesses have left Ghana to other countries, largely Cote D’Ivoire.
As such, the CUTS regional director stated that by increasing the cost of electricity it will enable power producers make “supranormal profits” which will end up collapsing the private sector.
“So, if PURC would have held on for at least one month, they would have been able to know that there would be no need for the increased tariff at this time and perhaps PURC is oblivious of the impact of their action. Businesses are struggling, new tax measures have been introduced, businesses which have got their bonds with government now have to accept some bad haircuts. How do we expect businesses to operate in this high operating environment?”
Appiah Kusi Adomako
Furthermore, Mr Adomako highlighted that when the private sector leave the country due to unfriendly business environment, there will be no employment. In light of this, he expressed the need for the PURC to relook all other factors without necessarily focusing on the dollar/cedi.
“Sometime we need to be rational as a regulatory body and see how things are driving.”
Appiah Kusi Adomako
The Public Utilities and Regulatory Commission (PURC) on May 17, 2023, approved tariff increases for natural gas and electricity for the second quarter of 2023 by 18.36%
According to the Commission, it has concluded the quarterly tariffs review for the second quarter of 2023 as part of its regulatory mandate. The review, it noted, has resulted in the Commission approving the rate of tariff increases for natural gas and electricity for the second quarter of 2023.
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