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Reflex Eco Group – Ghana News

by Samuel Boadi (local journalist)

The Trades Union Congress (TUC) has indicated that any attempt to further overburden Ghanaians with high utility tariffs could have undesirable social and political implications for latter.

A press statement issued in Accra signed by Kofi Asamoah, General Secretary of TUC, said: “Given the dire economic situation many Ghanaians face, the TUC will recommend that ECG rather aim at cutting losses or at best, breaking even. The ECG continues to report systems losses in excess of 20 percent.”

Also it mentioned that merely raising tariffs unaccompanied by other measures that address the systemic challenges has failed to improve the situation.

“There is need to separate the operation costs of service providers from their investment costs. At this stage in our national development, it is simply not possible for consumers to be asked to bear the investment cost of the utilities.

“The utility companies are frantically making a case for upward adjustment in utility tariffs. And they are doing so at a time when nearly everyone is dissatisfied with the quality of their service delivery. Supply of both electricity and water has become erratic, albeit some improvements in recent times.”

“Volta River Authority (VRA) is asking PURC to increase its tariff by 137.5 percent. GRIDCO was asking for an upward adjustment of 39.36 percent. Electricity Company of Ghana (ECG) is asking for 166 percent increase in electricity tariff across board and Ghana Water is asking for increase of 99.39 percent.

Explaining further, TUC said about 51 percent of ECG’s customers are lifeline consumers while domestic consumers account for 84 percent of the customers of Ghana Water.

“The TUC views the proposed tariff increases of 166 percent by the ECG to be too high and unacceptable given the fact that Ghanaians are already overstretched.

“The failure to allow the automatic adjustment mechanism to work as agreed among the stakeholders in 2010 is the prime reason why the ECG is asking for this high increase. Obviously, this is a political failure for which Ghanaians should not be liable. The political establishment that scuttled the mechanism should deal with it.”

In 2010, ECG made a marginal profit of about US$4 million partly as a result of the upward tariff adjustment that year. In 2011, and 2012, the company recorded losses of US$16 million and US$26 million respectively.

The World Bank reports that in the last quarter of 2012, the systems loss was about 27 percent.

According to the Bank, a 10 percent reduction in such losses could earn the ECG some US$85 million, more than enough to wipe out the losses incurred in 2011 and 2012.

There is also the issue of uncollected revenues by the ECG. Again, according to the World Bank, private consumers owed the ECG about GHC205.4 million.

Government agencies and institutions including the universities owe the ECG a total of GHC428.2 million.

By the close of 2012, government’s indebtedness to ECG stood at over GHC400 million.

In the case of Ghana Water Company, it loses nearly half of the water it produces.

“Its official target for what it calls non-revenue water (NRW) is 46.3 percent. Strangely, the PURC allows for NRW of 45 percent. What this means is that the official regulator permits Ghana Water Company to lose nearly half of the product-water. It makes sense, therefore, that the company is in dire financial difficulties. And in the view of the TUC, the company requires something else rather than tariff increase to fix the many challenges it faces.”

The TUC also asked government to clarify its role in the provision of utility.

“Government has primary responsibility for investing in infrastructure for power, water generation and delivery. It is important that government does not shirk that responsibility.”