The Public Utility Regulatory Commission (PURC) has shed light on the factors it took into account when approving the recent 18.3 percent increase in electricity tariffs.
The commission clarified that the tariff was initially proposed to be raised by 27.5 percent in order to cover approximately GH¢1.3 billion that the Electricity Company of Ghana (ECG) needed to recover.
However, after careful consideration, the Commission made the decision to approve a lower increase of 18.36 percent.
This adjustment means that there is still an outstanding amount of GH¢427 million that Ghanaians will eventually have to pay in the next tariff adjustment.
The PURC’s decision to approve a slightly lower increase reflects their attempt to strike a balance between the financial needs of the electricity sector and the affordability for consumers.
They recognized that a higher tariff increase would have placed a heavier burden on consumers, especially in a time when there are already economic challenges and cost-of-living pressures.
By opting for a more moderate increase, the Commission aims to mitigate the immediate impact on consumers while ensuring that the ECG can still recover the outstanding amount owed.
The outstanding GH¢427 million will be factored into future tariff adjustments, spreading the financial burden over a period of time rather than imposing it all at once.
The PURC’s role is to regulate and ensure a fair and sustainable electricity pricing structure that benefits both consumers and the electricity sector.
Their decision-making process involves careful evaluation of various factors, including the financial health of utility companies, cost recovery requirements, and the affordability of tariffs for consumers.
It is important to note that the decision to increase tariffs is never taken lightly, as it directly affects households, businesses, and the overall economy.
The PURC aims to strike a delicate balance between ensuring the financial viability of utility companies and safeguarding the interests of consumers.
During a media interview held alongside a training workshop focused on the activities of the Commission, Dr. Ishmael Ackah, the Executive Secretary of the Public Utility Regulatory Commission (PURC), assured the Ghanaian public that the tariff adjustments were solely aimed at ensuring the financial viability of utility providers.
Dr. Ackah explained that the tariff increase, set to take effect on June 1, was designed to account for 100 percent of the changes in inflation, 100 percent of the changes in natural gas costs, and 50 percent of the change in exchange rates.
However, it is important to note that the exchange rate component constitutes approximately 60 percent of the quarterly adjustment.This 60 percent alone amounts to around GH¢427 million.
He further clarified that if, in the next quarter, the exchange rate falls below the current level used for calculations, resulting in savings that can cover both the outstanding GH¢427 million and ensure the stability of the Electricity Company of Ghana (ECG), there will be no need for any further tariff increase.
However, if the exchange rate does not provide adequate coverage for the outstanding amount, a tariff increase may be necessary.
Credit : citinewsroom.com
