High tariffs not sole solution to problems of utility companies – ACEP

The Africa Centre for Energy Policy (ACEP), says agreeing to the proposals for tariff increment by the Electricity Company of Ghana (ECG) and the Ghana Water Company Limited (GWCL) does not necessarily mean that it is the sole panacea to the challenges they face.

ACEP’s Executive Director, Ben Boakye says the utility companies must have strategies to address their numerous challenges other than expect to address them with higher tariffs.

“The tariff adjustment alone is not the silver bullet. It is not going to solve the energy sector problems because we are getting inefficient by the day, we are wasting more money by the day,” he said on Eyewitness News.

The Electricity Company of Ghana had proposed that its tariffs be increased by 148% for 2022 and with 7.6% average adjustments between the periods of 2023 to 2026.

The proposed sharp increment, according to ECG, is due to the gap between the actual cost recovery tariff and PURC-approved tariffs as well as the cost of completed projects.

It made the call in a document presented to the Public Utilities Regulatory Commission (PURC).

The Ghana Water Company, in a similar document, is also proposing an increment in its tariffs to be able to at least recover its operational cost.

Although he believes an increment is necessary, Ben Boakye stated that efforts must be made to run the utility companies efficiently to drive profitability.

He added that although previous attempts to address the underlying challenges of the utility companies have been unsuccessful, fresh efforts must be made to make the companies more efficient, stressing that the government must not continue to intervene by absorbing their losses

“We need to have these utilities operate as a business, recover their cost at the barest minimum and function effectively. The reason why we keep making these losses is because it is the same government that is operating these companies and when the losses are created, nobody is sanctioned and there is no way to get accountability for the losses and a budget shows up to absorb the losses time and again… From where we sit, at no point should government be intervening the way we do. We have been advocating for years for us to separate the politics from the business of the utilities.”

Meanwhile the GWCL, ECG, PURC and other stakeholders are expected to engage in series of stakeholder meetings before a conclusion is drawn on the percentage of the tariff adjustment.


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