Tariff hike will worsen plight of Ghanaians – Minority

The Minority in Parliament has asked the government to cushion Ghanaians against what it calls “worsening poverty levels”, following an increment in water and electricity tariffs.

The Minority in a statement said the free fall of the cedi and rising inflation rate emphasize the need for government to consider reducing the rate of increments for utility tariffs.

“We are of the strongest conviction that Government can and must do something to cushion Ghanaians who are going through unimaginable hardships with ever-worsening poverty levels under the Akufo-Addo/Bawumiah-led government.”

“The country is already reeling under a galloping inflation estimated at about 32% thus, this utility tarrif increment will only exacerbate the current high cost of living and will thus worsen the plight of the already impoverished Ghanaian,” portions of the Minority’s statement signed by the Ranking Member on the Mines and Energy Committee, John Abdulai Jinapor said.

The Public Utilities Regulatory Commission (PURC) announced a 27.15% increase in tariff for electricity and 21.55% increase in water tariff on Monday, August 15, 2022. The new prices will take effect from September 1, 2022.

The Electricity Company of Ghana and Ghana Water Company Limited had earlier proposed an increase in tariffs by 148% and 334% respectively.

The Minority claimed that the hike in electricity tariffs was more than what the PURC had announced.

“Firstly, we wish to debunk the misleading conclusion that the PURC has increased the electricity tariffs by 27% for all consumers. A critical look at the tariff structure as announced reveals that all residential consumers who fall between 0-300 kWh bracket have witnessed a price increase from GHp/kWh 65.4161 to GHp/kWh89.0422, representing an increment of almost 34%.”

Below is the statement from the Minority

The Minority in Parliament has taken note of the significant utility tariff hikes for electricity and water in an announcement by the Public Utilities Regulatory Commission (PURC).

Firstly, we wish to debunk the misleading conclusion that the PURC has increased the Electricity tariffs by 27% for all consumers.

A critical look at the tariff structure as announced reveals that all residential consumers who fall between 0-300 kWh bracket have witnessed a price increase from GHp/kWh 65.4161 to GHp/kWh89.0422, representing an increment of almost 34%.

It should be noted that the bulk of residential consumers fall within the 0-300 kWh bracket and will therefore be adversely affected by the 34% adjustment.

More importantly, we have taken note that the increment is on account of the worsening Ghana Cedi against other major trading currencies.

The Cedi has in recent times witnessed a free fall, reaching almost 50%, and is currently rated amongst the worst performing currencies in the world.

The country is already reeling under galloping inflation estimated at about 32% thus, this utility tariff increment will only exacerbate the current high cost of living and will thus worsen the plight of the already impoverished Ghanaians.

Prior to these electricity tariff increments, Petroleum products at the pumps have witnessed a colossal increment of about 100%. So far, the Energy Debt Recovery Levy has seen an increase of 20%; the Price Stabilization and Recovery Levy is up by 40%. The Unified Petroleum Pricing Formula has been increased by 164%, whilst the BOST margin has been increased from 3 Pesewas to 9 Pesewas representing a 200% increase. As if this is not enough, the fuel marking margin levy has also been increased by another 233%.

This is against the background that the volume of petroleum products consumed has increased by 35% from 4 billion litres to 5.5 billion litres.

We are of the strongest conviction that Government can and must do something to cushion Ghanaians who are going through unimaginable hardships with ever-worsening poverty levels under the Akufo-Addo/Bawumiah-led government.

It will be recalled that following the major tariff review in 2016, the NDC Government intervened, resulting in a reduction of the rate of increment by close to 50%.

We have also taken note of the government’s announcement that an unexpected windfall of about USD500,000 from Ghana’s share of petroleum resources was accrued in the 2022 mid-year budget statement.

This statement clearly means the government is making huge unanticipated revenues from crude exports, hence the need to cushion the suffering masses from these windfalls.

Finally, we wish to caution the PURC to refrain from capturing the AKSA plant which has had its contract tenure expired in the price build-up since that will be illegal.

Thank you.

John Abdulai Jinapor
Ranking Member: Mines and Energy Committee

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Source: citi newsroom