For some Ghanaians, the Public Utility Regulatory
Commission (PURC) has failed to keep its promise after it finally raised
utility prices with a 78.9 per cent slap on electricity and 52 per cent
on water on Wednesday.
Earlier, the Commission dismissed speculations of imminent increases.
Though the increases were lower than the 166 per
cent and 122 per cent requested by the electricity and water providers
respectively, they were received with anger.
The Electricity Company of Ghana (ECG) wanted the
increase in order to help it bridge its $170 million annual funding gap.
Power generators, Volta River Authority (VRA) wanted an increase of
137.5 per cent; power carriers, Ghana Grid Company Limited, 39.36 per
cent; and the Ghana Water Company, 99.39 per cent.
The country's Trades Union Congress (TUC) has reacted angrily.
“It is huge and we cannot pay,” said, the Secretary-General, Mr Kofi Asamoah.
Mr Asamoah said, the labour movement was not
totally opposed to tariff adjustment. “It is, however, unfair to the
people of Ghana and we are angry because the figures are unacceptable as
the pay increment that the government granted to workers is just 10 per
cent,” he added.
Mr Asamoah said, “it is sad that PURC is engaging
in political expediency which might lead to the closure of some
industries or even relocation of others”.
PURC spokesperson Nana Yaa Jantuah, denied the charge.
Already, there were signs that the commission was
going to face the wrath of the public. An Accra owner of a water
packaging firm, Mr Andrews Sekyi said, “the PURC has just swindled the
people and is taking them for a ride”.
Proposal gaps
By March this year, Ms Jantuah publicly condemned a
World Bank report which accused PURC of incompetence for failing to
adjust existing low utility prices.
In response, PURC asked the Bank to apologise and
described as “woefully unacceptable” the attack on the competence of its
management and board.
The World Bank’s attack followed a study which
noted that, “costly energy subsidies, and higher interest cost, pushed
the fiscal deficit to about 12 per cent of GDP,” adding that, “activity
in the non-oil sector is dampened by energy disruptions”.
In addition, it was the Bank’s view that, the
board members of PURC and ECG lacked managerial competence, which had
resulted in the mediocre performance of the energy sector.
Mr Sekyi said, PURC needed to explain to the people why it lied that there would not be any increase.
On April 17, Ms Jantuah told a press conference
that, “upward review is not possible now, particularly given the fact
that the right processes have to be followed”.
That was when the utility providers sought approval to increase tariff rates.
“We are looking at the proposals now. There are
even some proposal gaps that must to be filled and before that is done,
we cannot say that the proposal is complete,” she said.
Ms Jantuah also said that utility providers were
expected to publish their proposals in the newspapers for the public to
respond before effecting changes.
Some pressure groups have threatened protests if the government does not back down on the price increases.
The Alliance for Accountable Governance (AFAG) accused PURC of pandering to the wishes of the World Bank.
Extra crude oil
“We will do everything possible to make the
government reverse this price increase that is likely to affect the
ordinary people more,” AFAG said in a statement.
But even as temperatures rose, it did not look
like the government was ready to reverse the decision because the sector
has been bedevilled by a myriad of problems that must be tackled.
The World Bank has accused the government of
delaying investments in gas supply and power generation, which, it said
was the cause of power shortages for most part of this year.
“While the blackouts are partly due to the
unexpected interruption of imported gas supplies, a deeper look reveals a
broader problem of a power sector without a cushion to absorb external
shocks.”
It also cited delays in the production of gas from
the Jubilee Fields, which has left power plants idle or burning very
expensive oil.
So far, a three-year delay in commercialising
Jubilee gas has cost Ghana a billion dollars in extra crude oil used for
power generation. Also, Ghana has not been able to attract substantial
private investment in power generation because of the low
creditworthiness of its utilities.
“Several state-owned energy enterprises and
oversight entities are underperforming. There is an absence of
accountability and proper oversight and a lack of sanctions for
non-performance in delivery of energy supply. Third, the current
pricing/tariff and subsidy policies for energy are not financially
sustainable,” the Bank's report said.
It also said, energy providers did not collect
adequate revenues from users and struggled with inadequate state
subsidies, consequently, the providers found it difficult to maintain
and expand their physical infrastructure while at the same time, the
burden of these subsidies weighed heavily on the nation’s budget.
Against this background, the government was
unlikely to side with the poor to reverse the price increases, hoping
that with time, the anger would cease.
SOURCE: AFRICAN REVIEW
SOURCE: AFRICAN REVIEW
