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Statement: Ghana Grid Company Limited (GRIDCo) On The Recent Tariff Announcement By The PURC   
 
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16-Oct-2013  
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The Public Utilities Regulatory Commission (PURC) granted GRIDCo a tariff increase of 13.5 per cent.

However, considering the rate of inflation and depreciation of the Cedi, the real value of the new Transmission Service Charge (TSC) is 10.83% less than its value in December 2011, when the last tariff review took place.

GRIDCo assures all Ghanaians that the 13.5 per cent increase in the TSC granted the company out of the 39.89% per cent we proposed to the PURC will not affect the quality and reliability of service delivery to our customers in the short term. In the medium-to-long-term, however, it will, if the automatic tariff adjustment mechanism is not implemented to enable us recover the costs of operations and network strengthening.

GRIDCo’s Proposal to PURC

In our submissions to the PURC for a review of the transmission tariff we stated that we needed an increase to financially sustain GRIDCo’s electricity transmission business and to ensure the continued viability of the company. Our rationale for requesting the increase was as follows:

I. Increase in Operations and Maintenance Costs of power transmission due to rapid expansion of the network and increases in costs of inputs required for the maintenance of the national interconnected transmission system.

II. Investments to replace obsolete power system equipment and reinforce transmission network for increased reliability of power supply.

III. To service repayments of loans, most of which are commercial loans contracted for capital works associated with the network expansion.

IV. Escalation in the cost of loan repayments due to the depreciation of the cedi.

As a national transmission utility we are fully aware of our responsibilities and how our services ensure economic development and security across our frontiers. The demand for electricity is growing at more than eight per cent per annum. Our projections indicate that the country’s requirements for electricity will hit 2,764.2MW in 2015 compared to the 2013 projection of 2,016MW.

If we do not double our investments in the transmission system in particular and the power sector in general, we would soon run into problems associated with weak transmission infrastructure, which could manifest themselves as poor voltages and inability to evacuate bulk power even if generation of power is adequate.

Imagine having a corn mill in a village around Garu Tempane at the furthest end of the power system which is likely to suffer low voltages and cannot operate. We must therefore be in a good position to complete a number of projects lined up to efficiently evacuate all the power generated and also meet the Regulators’ compliance targets.

Our substation equipment generally have a lifespan of 30 years and it is about time we replaced a number of these to enhance reliability of services. Inspite of our challenges as a transmission utility our network is one of the most efficient on the continent, operating at 98.67 per cent availability.

We intend making this better. We will not rest on our oars but continue to pursue an aggressive modernization and expansion of the transmission network, build loops and create redundancies in order to have the electric grid of the future where customers will not experience outages because of problems in the transmission network.

Ultimately, by 2017 we hope to add nearly 2, 000 kilometres of transmission lines to the existing 4,500km and 19 substations to the to the existing 50 at an estimated cost of US$633 million.

We have already seen improvements in reliability of supply following our quest to reinforce and modernize the transmission system to ensure increased reliable transmission of power to meet the growing demand for electricity from customers. So far this has been made possible through commercial loans and revenue from the tariff since 2010.

We strongly recommend that the Automatic Tariff Adjustment mechanism should be implemented to ensure that we become financially viable and service our debts.

Conclusions

In conclusion we state that the new Transmission Service Charge is grossly inadequate therefore GRIDCo may have to scale down system reinforcement projects as it will be unable to secure the necessary funding.

GRIDCo workers are very enthusiastic to build a robust transmission network comparable to the best of networks in the world. We need the support of Ghanaians to enable us deliver on our mandate and serve better the interest of the Shareholder – the People of Ghana. This would be possible when we have realistic and economic tariffs not only for GRIDCo but for all other entities in the power sector.


Albert Kwesi Quainoo
HEAD, PUBLIC RELATIONS
 
 
 
 

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