Director of Research and Corporate Affairs at the Public Utilities Regulatory Commission (PURC), Dr. Eric Kofi Obutey, has reiterated that the commission took the country’s current challenging economic climate into careful consideration while developing the new utility prices.
Speaking to Samuel Eshun on e.tv Ghana’s “Fact Sheet”, Dr. Obutey disclosed that the government rolled out some measures to help state-owned utilities cushion the tariff rates in the country.
According to him, these included forfeiting to take the advancement of loans and the return of equity from the various utilities.
“Earlier on I said that we were looking at the grants, government funding and the internally generated funds for the Capex (Capital expenses) but for the Opex (Operational expenses) everything was granted. For the Capex we look at grants and if you’re going to receive grants you don’t need to pass through the tariffs. Obviously, that will not influence the tariffs so that will bring it down. Government funding in the sense that government said it’s giving them some loans and we call them all lend loans and after the loans have been given to them, they’re supposed to pay that with interest. Government said these loans advanced to you keep them under the circumstances we know that times are hard for everyone so used that to cushion the tariffs so we take that one out because you’re not going to pay back government,” he explained.
“Now at the same time government is the sole shareholder of the public utilities, ECG, Ghana Water Company, VRA, government is the sole shareholder of these companies. So, they’re supposed to pay return on equity to government. Now government says those return on equity that you pay to me for now shelve it don’t pay that to me but use it to cushion your tariffs,” Dr. Obutey added.
He further indicated that approved tariff rates ordinarily covered a window span of five (5) years, from 2022-2027. However, due to the economic difficulties of the country, the government decided to shelve the latter two (2) year tariffs span rate.
“The last but not the least of them all is that when the proposals were brought to the commission, they were based on 2022-2027 that’s a five-year tariff window. Now we’re doing a three-year tariff window which is 2022-2025. So obviously the last two years in investments which was supposed to do in 2026 and 2027 have been hived off as well. So that obviously will not influence the tariffs and with all these components put together it brought the tariffs down to this level,” he added.
The average end-user prices for water and electricity have both been hiked by 21.55 percent and 27.15 percent, respectively, by the Public Utilities Regulatory Commission (PURC), with an effective date of September 1, 2022.
Additionally, the commission has given the go-ahead for a Weighted Average Cost of Gas (WACOG) of GH 44.
By: Jude Tackie
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