Think Tank calls for a reduction in electricity tariffs

CUTS Ghana, a research and policy think tank, has called on the Public Utilities Regulatory Commission (PURC) to immediately consider downward review of all electricity tariffs to give relief to businesses and consumers.

It said with a fall in prices of the key input fuel for power generation in the world market, it was fair and reasonable for the PURC to consider immediate review of electricity tariffs to reflect the current cost of generation in the electricity power mix.

This was contained in a statement issued and signed by Mr Appiah Kusi Adomako, the Country Director and copied to the Ghana News Agency (GNA) in Accra on Friday.

The statement said currently there was a fall in demand for crude oil and natural gas, adding that the current price for natural gas had fallen from $6.07/MMBtu in July, 2019 to $1.8/MMtu, while crude oil had fallen to about $20 per barrel.

“From the last review of tariffs which took effect from July 1st, 2019, the Commission made their tariffs determination based on some key assumptions which have changed substantially.

With respect to Natural Gas and Heavy Fuel Oil (HFO) as fuel for generation of electrical energy for the 2019-2020 tariff period, the Commission approved a $6.08/MMBtu as the Weighted Average Delivered Price of Gas and $390Metric Tonne for HFO,”

“According to the Ministry of Energy, the total installed capacity for existing plants in Ghana is 4,132MW consisting of 38 per cent Hydro, 61 per cent Thermal and less than one per cent Solar.

Since about two-third of Ghana’s energy mix is from thermal sources which use either natural gas or crude oil which has seen a drastic fall in prices from the previous review, the Commission should as a matter of priority consider tariffs review,” it added.

It said reducing electricity tariffs was therefore not a humanitarian or an act of charity to the consumers, but rather a decision which was grounded in mathematics, accounting and economics principles.

“All over the world, countries that depend on natural gas and fuel have seen prices of electricity going down and for that reason Ghana cannot be an exception to this obvious reality. As it has always being the case for tariff review in Ghana whereby utility providers submit proposals to the PURC for upward review, today, we the consumers of electricity are calling on the Commission to act on the interest of electricity consumers and review prices down.

The statement said with majority of workers at home on reduced income and businesses operating under capacity as a result of the global COVID-19 pandemic, a reduction in tariffs would go a long way to mitigate their plight.

CUTS International is an independent non-profit economic policy research, advocacy and capacity building think tank with regional centers in Accra, Lusaka, and Nairobi, Geneva, Delhi, Jaipur and Washington, DC. CUTS functional areas are in trade and development, regional integration, competition policy, economic and investment regulation as well as consumer education.

Source: GNA

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