Gov’t urges PURC to implement automatic tariff adjustment formula in 2014
The Government has taken measures to cushion the effects of the utility tariff increases announced in October by the Public Utilities Regulatory Commission (PURC), on consumers.
A communiqué signed by Mr Felix Kwakye Ofosu, Deputy Minister of Information and Media Relations, and copied to the Ghana News Agency on Sunday, announced that the starting point of the electricity tariff increase towards full cost recovery had been reduced by 25 per cent.
This implies that the starting point towards the full cost recovery has been reduced from 78.9 per cent to 59.18 per cent with effect from 1st October , 2013.
It said since the PURC had 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.
“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”, it stated.
It further indicated that a full cost recovery for electricity was expected to be achieved within nine months from October, 2013 to June, 2014.
According to the communiqué, the PURC was encouraged to implement the Automatic Tariff Adjustment Formula (ATAF) starting from January, 2014.
“The action by Government will translate into a subsidy of over GH₵400 million to be paid to the utility companies to maintain a steady supply of energy.
“While the full recoverable tariff at the present time amounts to 120 percent increase, Government has accepted the recovery to be implemented over a schedule period using the automatic adjustment formula,” it indicated.
The communiqué said Government had also noted the observation that the assumptions underlying these recommendations could change based on certain variables such as availability of more Gas supply for generation and a reduced reliance on expensive light crude oil.
In such circumstances the PURC would factor these changes into any adjustments made in the future under the Automatic Adjustment formula, it explained.
The measures were adopted after Government had reviewed the report of the Technical Working Group and in consultation with the social partners including Ghana Employers’ Association (GEA), Association of Ghana Industries (AGI), Ghana Chamber of Commerce and Organized Labour led by the Trades Union Congress (TUC).
It would be recalled that the PURC announced increases of electricity and water tariffs by 52 per cent and 78.9 per cent respectively, with effect from 1st October, 2013. This gave rise to a number of protests from the general public who described the new rates as unbearable, as well as calls on the Government to review those new tariffs.
Consequently, Government set up a Technical Working Group to study the new tariffs and submit a recommendation for consideration.