ADJUSTMENT OF TARIFFS (OCTOBER 22, 2007)

THE Public Utilities Regulatory Commission (PURC) has announced an upward adjustment in utility tariffs effective November 1, 2007. Power tariffs have gone up on the average by 35 per cent, while water tariffs have gone up by 35 per cent across board.
The imperative to adjust tariffs upwards has been attributed to many reasons, key among them being the rising cost of production.
A statement issued on the tariff adjustment quoted Mr Kwame Pianim, the Chairman of the PURC, as saying that the cost of power had increased and that was attributed to the significant increase in the growth in demand for electricity within the last few years, the consequent shift in the generation mix from hydro to thermal sources, which cost about five times more than hydro, and increases in world crude oil prices.
The same statement said the increase of 35 per cent across board for the Ghana Water Company Limited (GWCL) would enable it to absorb increased costs in energy and other operational inputs, such as chemical prices which had increased significantly since the last tariff adjustment of May 2006.
That utility tariffs would go up before the end of the year was not in doubt, following more than a year of load shedding. The operations of the two utility companies are not mutually exclusive because the GWCL, in particular, requires regular supply of power to operate its water systems throughout the city.
It is welcome news that the PURC itself is concerned about the quality of services provided by the Electricity Company of Ghana (ECG), hence its decision to set in motion a machinery to undertake technical and financial audits with a view to ascertaining what costs can justifiably be passed on to the consuming public.
However, the public has become sceptical of the effectiveness of the PURC because similar assurances in the past that it would not pass on the inefficiencies of the utilities to the consumer were anything but satisfactory.
The ECG, in particular, has paid lip service to the provision of pre-paid meters, although it is aware that low payment of bills by consumers has affected its finances. In some cases too, the ECG has imported poor quality pre-paid meters into the country and this has, no doubt, had a negative effect on their finances.
Indeed, our attention has been drawn to the fact that the pilot pre-paid meter project undertaken by the ECG in the Sakumono SSNIT Flats and Regimanuel Estates area, for instance, has serious challenges — some of the meters have stopped functioning for years, with the result that many households are enjoying free supply of power — and yet management has closed its eyes to the problem, while the finances of the company continue to dwindle.
A reliable supply of water and electricity encourages greater productivity and better standards of living, since there are monetary and non-monetary benefits that improved access to the two utilities will bring to poor households in the form of improved communication and a reduction in water-borne diseases. Access to these utilities at affordable rates will help pull out a majority of people from the vicious circle of poverty.
Tariff increases can also reduce job opportunities if companies become less competitive. If production costs rise, firms become less competitive, jobs may be lost and goods become more expensive.
Nobody wants a repetition of the harrowing experience of the load-shedding programme. Nonetheless, that does not call for the imposition of tariffs that will further worsen the plight of the ordinary Ghanaian.
The Daily Graphic calls on the PURC to play its regulatory role such that tariff increases will come with improved services, few unannounced power outages and surges and a reduction in complaints from water consumers that for months water never drops from their taps. Also, the EGG and the GWCL must take steps now to address the rising problem of illegal connections and burst pipelines that are not attended to, thereby creating so much revenue loss to them. The utilities need to secure the partnership of the public if any upward adjustment is to make an impact on the supply of power and water. Without public support, the waste in the system will grow and a solution to the poor supply of water and electricity will continue to be mirage.