The utility companies have cited increased cost of production and expenditure on new projects as the main reason for their proposed increase in tariffs.
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Explainer: Why ECG & Ghana Water want over 100% increase in utilities
The Ghana Water Company Limited (GWCL) and the Electricity Company of Ghana have proposed more than 100% increase in tariffs for this year.
ECG
The GWCL wants an increase of 334% and ECG also wants 148% increase. Their proposals await approval or otherwise from the regulator, Public Utilities Regulatory Commission (PURC).
A report by these two utility service providers to the regulator further explained that it has become necessary to increase tariffs at the proposed rate because the PURC-approved tariffs have never reflected the high cost of production.
The ECG and GWCL again explained that the PURC’s decision to reject their previous proposed tariffs is affecting their operations. The GWCL for example states that it is unable to raise enough revenue to fund its capital investment projects.
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Lastly, the ECG says it will require the new proposed tariff to be able to fund the cost of its investment costs. “The gap that has developed over the years between the actual cost recovery tariff and the PURC approved tariffs; the continual application of the prevailing tariff (which was a 14% reduction) beyond the stipulated regulatory period (2019-2020); and the effect of macroeconomic factors.”
Meanwhile, the two companies have promised to deliver and provide world class service if the regulator, PURC, approves their new rates for them.
The PURC is also expected to issue a statement on whether it will approve the proposed tariffs or not in the coming days.
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