The Public Utilities Regulatory Commission (PURC) has served an order on the Ghana Water Company Limited (GWCL) for breach of section 11 of the Public Utilities Regulatory Commission Act 1997, (Act 538).
The PURC has, therefore, asked the GWCL to reduce the tariff on all 10.08 per cent tariff reduction on the prevailing rates, for all customers of GWCL, effective September 16.
A statement signed by Mrs Mami Dufie Ofori, the Executive Secretary for PURC and copied to the Ghana News Agency on Wednesday said, the Commission recently notified the Company of its non-compliance with tariff decision and regulatory directives in relation to the Teshie Desalination Plant operated by Befesa Desalination Developments Ghana Limited.
It said the GWCL in 2011, entered into a 25-year Build, Own, Operate, and Transfer (BOOT) Water Purchase Agreement (WPA) with Befesa Desalination Development Ghana Limited (Befesa).
The statement said by the agreement, GWCL was to buy all water produced from the 60,000m3 Befesa sea water desalination plant for supply to Teshie, Nungua and surrounding areas, adding that, the desalination plant commenced production in February 2015.
The statement said since the Major Tariff Review of December 2015, water tariffs approved by the Public Utilities Regulatory Commission have included the contracted cost of the plant.
It further said the Commission issued an enforcement notification after it undertook a number of measures aimed at giving GWCL a hearing and clarifying the tariff implications associated with GWCL’s operational decisions in respect of the desalination plant between January and July 2018 but the Company failed to comply.
In July 2018, the Commission published new water tariffs effective July 15, this year which maintained costs related to the desalination plant in the weighted average water production tariff.
The Commission’s decision to maintain cost relating to the plant in the tariff was informed by GWCL’s own decision to operate the desalination plant, which the company communicated to the Commission in its letter, dated May 16, this year.
“Monitoring exercises undertaken by the Commission including its recent monitoring on August 23, 2018 established that to date GWCL has failed or refused to allow the desalination plant to operate, contrary to the Commission’s tariff decision,” the statement said.
The statement said the above facts paved way for the Commission to make the determinations under Section 12 of Act 538, which include compelling the GWCL to forfeit tariffs related to the desalination plant leading to an 8.64 per cent reduction in tariffs.
It further said the GWCL shall refund GH¢14million to all its customers, resulting in a further tariff decline of 1.41 per cent, adding that, GWCL shall also pay more than GH¢540million as compensation to all its customers, resulting in 0.03 per cent reduction in tariff.
The tariff forfeiture, refund, and compensation, sum up to a 10.08 per cent tariff reduction on the prevailing water tariff rates for all customers of GWCL.
The statement said the tariff reduction shall remain in effect until the desalination plant is put back into operation or until otherwise decided by the Commission, adding that, “The refund and compensation to customers shall be reflected in customer bills from September to December 2018 billing cycles”.