Ghana reduces power tariff to 59% after labour threat

Electricity tariff has been reviewed from 78.9 to 59.18 per cent, following calls from the labour front to reduce the recent upward adjustment in utility tariffs.

The new tariff shows a 25 per cent downward review and takes effect from October 1.

A communiqué signed by the Deputy Minister of Information and Media Relations, Mr Felix Kwakye Ofosu, said the government would have to pay over GH¢400 million subsidy to the utility companies to maintain a steady supply of energy.

The communiqué was, however, silent on water tariffs, even though the concerns of the public have been over the upward adjustment of 78.9 per cent in electricity and the 52 per cent increment in water tariffs with effect from October 1, 2013. This means that the water tariff remains the same.

The decision, which is expected to “cushion the effect of utility tariff increases on consumers” was taken in consultation with the Ghana Employers Association, the Association of Ghana Industries, the Ghana Chamber of Commerce and Industry and organised labour led by the Trades Union Congress.

The government said it had followed developments in the country since the PURC announced the increases and that “since the PURC has already gazetted the 78.9 per cent increase in the electricity tariff, government will absorb the difference between the gazetted increase of 78.9 per cent and the 59.18 per cent, including all levies and charges as agreed with the social partners”.

In line with the new arrangement, the government expects to attain a full-cost recovery for electricity within nine months, from October 2013 to June 2014, using an automatic adjustment formula.

“The PURC is encouraged to implement the automatic tariff adjustment formula starting from January 2014,” it said.

According to the communiqué, the government also notes the observation that the assumptions underlying the recommendation to reach a full recovery could change based on certain variables such as availability of more gas supply for generation and a reduced reliance on expensive light crude oil.

“The PURC would in such circumstances factor these changes into any adjustment made in the future under the automatic adjustment formula,” it said.

Calls for reduction

Since the increases were announced, groups such as organised labour, the Socialist Forum of Ghana, the New Patriotic Party (NPP), the Convention People’s Party (CPP) and the People’s National Convention (PNC) had condemned the measure as unreasonable and insensitive and called for a downward review.

A group calling itself Citizens Awake Forum threatened to stage a naked demonstration over what they said was the spate of corruption in the country and the recent utility tariff hikes.

The leader of the group, Mr Ernest Kojo Smith, said the date was yet to be decided but the demonstration was expected to draw about 10,000 people from all the 10 regions of the nation.

Another civil society group, the Truth and Accountability Forum (TAF), stated that it would stage a demonstration to force the PURC to reduce the utility tariffs.

One of the leaders of TAF, Mr Shaka Salia, said the PURC had failed to ensure that the utility service providers gave good and reliable service to consumers, adding that the increment would overburden Ghanaians.

Government’s intervention

Consequently, President John Dramani Mahama set up a Technical Working Group to study the new tariffs and submit a recommendation for consideration.

Taking into consideration the demands of organised labour and looking at various scenarios of tariffs, the group recommended a 60 per cent tariff to cover, at a minimum, the cost of generation and transmission.

10-day ultimatum

Before the Technical Working Group submitted its report, organised labour, led by the Trades Union Congress, on Tuesday, October 8, held a press conference during which its Secretary General, Mr Kofi Asamoah, gave the government and the PURC a 10-day ultimatum to reduce the utility tariffs or face a nationwide strike.

When the Technical Working Group’s report was ready, organised labour said it failed to address their concerns and, therefore, urged all workers in the formal and the informal sectors to lay down their tools on November 18 and also stage nationwide demonstrations.

Source: Daily Graphic