Utility Price Increases PURC Not To Blame

The African Institute of Energy and Sustainability (AIES) notes, with concern, the recent rather huge increases in utility tariffs.

Public utilities are so named because of the essential and basic nature of the services provided and how critical they are to the economic activities undertaken in a country. Thus, utility price adjustments are not to be taken lightly and must be approached with circumspection.

AIES believes that utility price increases, though not desirable, are unavoidable in most cases. This is largely attributable to economic and other external factors. It is in this regard that the Public Utilities Regulatory Commission (PURC) cannot be blamed for computing and announcing new tariffs which are obvious to any industry watcher. They were simply doing their job.

Indeed in this instance, PURC should be lauded for the regulatory aptitude shown in working out the new tariffs. Based on the demands of the utility providers and pure economics, the adjustment could have been significantly higher than was announced.

AIES asserts that the factors that led to the upwards adjustment lie outside the control of the PURC. These factors are issues of economic and policy ineptitude rather than regulation. These include the persistent weakness of the cedi against the dollar (which is used in procuring inputs by the utilities) and Ghana’s poor and lopsided energy mix resulting from poor policymaking. This has led to increasing dependence on gas and other petroleum products whose intermittent availability lead to generational shortages with demand for energy far outstripping supply significantly. This ordinarily would have led to price surges but for the resilience of PURC.

It is our recommendation that government urgently reviews Ghana’s energy (generation) mix to include other cheaper and more reliable sources like coal and the renewables. Government should also pay greater attention to Ghana’s huge hydroelectricity potential beyond Bui and the Volta.

PURC could also do well to be more sensitive in their timing of such tariff hikes

 
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Dr Samiu Kwadwo Nuamah

Executive director AIES

(0267172142)