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ECG proposed tariffs increase too high - TUC
 
Posted on: 17-Aug-2013         Source: GNA
 
 
 
The Trades Union Congress (TUC) said the proposed tariff increase of 166 per cent by the Electricity Company of Ghana (ECG) was too high and unacceptable given the fact that Ghanaians were already over-stretched.

The Union said failure to allow the automatic adjustment mechanism to work as agreed among the stakeholders in 2010 was the prime reason why the ECG was asking for a high increase.

A statement signed by Mr Kofi Asamoah, General Secretary of TUC, and copied to the Ghana News Agency, said any attempt to further over-burden Ghanaians could have undesirable social and political implications.

It said the ECG proposed increase would allow the company to move from a loss making position to a profit position, although, marginal.

“In 2010, the ECG made a marginal profit of about US$4 million partly as a result of the upward tariff adjustment. In 2011, and 2012, the Company made losses of US$16 million and US$26 million respectively,” it added.

The statement said failure to automatically adjust tariffs could be part of the reasons for the losses and that given the economic situation Ghanaians were facing, the TUC would recommend that ECG rather aimed at cutting losses or at best, breaking even.

It said on June 12, 2013, the Steering Committee of the TUC met all the players organised by the Public Utilities Regulatory Commission (PURC) to justify their proposals for increases in utility tariffs.

The statement said at the meeting, the Volta River Authority asked the PURC to increase its tariff by 137.5 per cent, the GRIDCO asked for an upward adjustment of 39.36 per cent, the ECG asked for 166 per cent increase in electricity tariff across board and the Ghana Water asked for an increase of 99.39 per cent.

It said experience over the past few years had shown that just raising tariffs unaccompanied by other measures that addressed the systemic challenges had failed to improve the situation.

The statement said low tariffs had been cited by the utility companies and the managers of the economy as the most important constraint that inhibited quality service delivery.

The TUC believes that many Ghanaians are not enthused about the proposed upward tariff adjustments when they are unable to provide quality service to its customers.

It said the ECG continued to report systems losses in excess of 20 per cent and that the World Bank Report in the last quarter of 2012, stated that the systems loss was about 27 per cent.

The report said 10 per cent 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.

The report also stated that private consumers owed the ECG about GH˘205.4 million while government agencies and institutions including the universities owed the ECG a total of GH˘428.2 million.

The Union is advocating the need to separate the operation costs of service providers from their investment costs since it is impossible for consumers to be asked to bear the investment cost of the utilities.

“About 51 per cent of ECG’s customers are lifeline consumers and domestic consumers account for 84 per cent of the customers of Ghana Water, therefore, with the level of incomes prevailing in the country, it will be highly unrealistic to think that realistic utility pricing will occur anytime soon,” the statement said.