ECG wants electricity tarrifs to be increased by 148%
Local currency depreciates against major trading currencies in first 4 months of 2022
Most payments are made in dollars, ACEP
Executive Director of the Africa Centre for Energy Policy (ACEP), Benjamin Boakye, has said he is optimistic electricity tariffs will go up soon.
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According to him, the depreciation of the local currency in the first four months of this year against major trading currencies is a contributing factor to the tariff adjustment.
Benjamin Boakye's comment comes after the Electricity Company of Ghana (ECG) sent a proposal to the Public Utilities Regulatory Commission (PURC) for an upward tariff adjustment.
Speaking on TV3’s News 360, Mr Boakye said, "First of all, these are proposals and as it is always done, when there is a major tariff announcement, the utilities will make proposals and PURC will examine the proposals to do further engagements with stakeholders and determine what the optimal tariffs would be. From where we sit we do not see why the tariff would not go up."
“If you look at the last tariff adjustments and you discount that by just the depreciation of the Cedi, most of the payments are made in dollars, that alone, the existing tariff has got about 32 per cent value," he stated.
“That of course, would require that we recover the lost value. Beyond that, the under-recoveries of ECG for 2021 was almost 50 per cent of their entire revenue requirement, which means that we need to find ways to recover how much they need to actually survive,” he added.
The Electricity Company of Ghana on May 9, 2021, demanded an increment of 148% on electricity tariffs from August 2022.
The company submitted a proposal to the Public Utilities Regulatory Commission (PURC) asking for an adjustment in electricity tariffs to cover the period between 2019 and 2022.
ECG also proposed an average increase of 7.6% in tariff over the next four years to cover Distribution Service Charges (DSC) while attributing the high increase in the Distribution Service Charges to the gap that has developed over the years between the actual cost recovery tariff and the PURC approved tariffs as well as the cost of completed projects.
“The result of ECG’s tariff proposal for the next five years shows an approximately 148% increase on the current DSC1 in 2022 and an average increase of 7.6% year on year from 2023 to 2026. The high increase in the DSC1 for the year 2022 could be attributed to the gap that has developed over the years between the actual cost recovery tariff and the PURC approved tariffs as well as the cost of completed projects,” ECG said.
“Similarly, ECG’s proposed DSC2 shows a higher increase of 28.4% in the first year (2022) while that of the subsequent years increases by an average of 2% from 2022 to 2026”, it added.
ACEP Executive Director, Benjamin Boakye
