The Independent Power Producers and other consumer stakeholders in the power sector are fighting the Electricity Company of Ghana, the Ghana Grid Company, Northern Electricity Company, and the Volta River Authority, over a possible increase in electricity tariff.
However, the Public Utilities Regulatory Commission (PURC) is considering adjusting electricity tariffs upwards once its Board is reconstituted.
Whilst the stakeholders including the Independent Power Producers argue that the cost of electricity in the country is too high, compared to neighboring countries, ECG and the other power generation and transmission firms believe their cost of operations has gone up, warranting an increase in electricity tariff.
During the stakeholder engagements that the PURC held, Joy Business, understands that the IPPs and the other stakeholders from the consumer perspective asked for a reduction in electricity bills.
This is because they argued that between 16% and 24% of power loss to technical and commercial losses by ECG is no fault of theirs.
They also claim that the country is operating within its contracted tariff, and therefore the only sensitive factor is fuel cost.
They further pointed out that ECG’s inefficiency has translated into high tariffs for consumers.
The Energy Minister, Dr. Mattew Opoku Prempeh yesterday charged the newly constituted Board of the VRA to ensure a reliable and affordable power supply in the country.
According to him, government dislikes “dumsor” and is working to ensure that the country does not return to the era of intermittent power supply.
But ECG and NEDCo, Joy Business understands need money to keep their operations afloat despite the losses.
PEF kicks against the increase in electricity tariff
The Private Enterprise Federation earlier kicked against the increase in electricity tariff, saying it will cripple many businesses, amid Covid-19.
It rather urged the government to do everything possible to make the Electricity Company of Ghana competitive.
“We are appealing to the government to ensure that whatever ECG needs, let them have it to ensure that we have a consistent flow of energy”, Chief Executive Officer, Nana Osei Bonsu told Joy Business.
Chamber of IPPs question rationale behind increase in electricity tariff
The Chamber of Independent Power Producers, Bulk Consumers, and Distributors earlier also questioned the rationale behind calls for electricity tariff adjustment, saying, that can only be done when ECG is efficient and financially sound.
According to the IPPs, the ECG is not competitive even among its peers in the West African sub-region.
Power sector shortfalls increase as electricity tariffs represent 73% of cost recovery –IMF
The International Monetary Fund in a report said the power sector shortfall remains large and growing, as electricity tariffs represent only 73% of cost recovery levels, with a large differential between household and business tariffs.
This tariff it said had only increased by just 5% since 2015.
“A tariff review was scheduled for July 2021. The authorities’ modeling analysis suggests that adjusting tariffs to inflation would be needed to bring the annual financial shortfall from electricity generation under US$500 million by 2024”, the Fund said.
The Bretton Wood institution said the Electricity Company of Ghana continues to suffer large technical losses, reaching ¢3 billion in 2018, a significant deterioration compared with 2016 and 2017.
It said the ECG continues to manage electricity distribution, without a clear reform plan.
A metering system is being put in place to address power theft and losses.