Policy Analyst, Dr. Steve Manteaw, has described the demand of increase in electricity and water tariffs as justifiable, saying, there is a strong basis for an upward adjustment, despite the inefficiencies of the utility firms.
According to him, factors such as inflation and exchange rate losses justify the upward increment.
ECG is demanding a 148% increase in electricity tariff, whilst the Ghana Water Company Limited wants 334%.
“There is a strong basis for an upward adjustment; if you look at inflation rate, if you look at the cedi depreciation and all that. But what the companies haven’t told us is what component is made up of transmission losses and commercial losses. These are categorised us inefficiency cost”, he disclosed on PM Express.
“PURC has the mandate to ensure that inefficiency costs are not passed onto consumers. Of course to deal with inefficiencies, you need to make investments, but you don’t make investments from tariffs”, Dr. Manteaw said.
He mentioned that in normal business practices, shareholders are mandated to inject capital into the business with regard to equipment renewal and all the capital investments needed.
“The shareholders in this case is the republic (government) and therefore we have to finance these major equipment renewal and maintenance activities from our taxes. They must be budgeted for through the budget and then in terms of the daily operations, you can actually finance through the taxes”, he added.
He said the package given to Aqua Vitens Rand were far more and better conditioned than those given to Ghanaian entities, adding, “I do recall when we went through ECG privatization, we were prepared to do for PDS what we were not prepared to do for our Ghanaian managers”.
For instance, he pointed out “when PDS took over, they asked that all the debt ECG had at the time were re-fenced. So it was not part of the account because those were legacy debts…they were not responsible. But we are not prepared to re-fenced for the old ECG”.
“Again, a year before PDS took over, we had denied ECG tariff adjustment (upward adjustment). But when PDS took over, we gladly approved upward adjustment for PDS”, he added.
Furthermore, Dr. Manteaw said “I tend to look at our utility companies sympathetically, a reason being that they really work under severe stress. And the conditions under which they work are not the type that any foreign multinational company will want to work under.”
“I recall we brought in Aqua Vitens Rand, we improve water distribution in this country and by the time we abrogated – we actually refused to renew that contract – we had the phenomenon known as the Kufuor gallons. When the facility reverted to the Ghanaian manager, the gallons disappeared”, he stressed.
