Former Minister for Power, Dr. Kwabena Donkor has indicated that it will take more than a tariff adjustment to salvage the Electricity Company of Ghana (ECG) from its current financial woes.
This comes on the back of proposals by ECG for an increment of more than 140% in tariffs to enable it to cover fully the cost of distributing power.
In an interview with Citi Business News, Dr. Donkor who doubles as the Ranking Member on the Employment, Social Welfare and State Enterprises Committee underscored the need for ECG to deal with its perennial technical and managerial challenges instead of focusing on the tariff increment.
He said, “ECG has a fundamental problem of non-collection, lethargic management, political and non-commercial intervention. ECG is currently making commercial and technical losses of 30 percent. If ECG buys 100 units of power, it is only able to sell 70 units. So no matter the markup you give them, it won’t make up for the 30 percent loss.”
“Those losses are made up of technical losses because they have underinvested over the years and therefore the technical infrastructure leaks power when they’re transmitting power. There are also commercial losses; which is a nice term for plain thievery. If we don’t plug these loopholes, the tariff adjustment will not be able to seal the financial hole that ECG finds itself in.”
The Electricity Company of Ghana last month proposed that its tariffs be increased by 148% for 2022 and with 7.6% average adjustments between the periods of 2023 to 2026.
The proposed sharp increment, according to ECG, is due to the gap between the actual cost recovery tariff and PURC-approved tariffs as well as the cost of completed projects.
Similarly, the Ghana Water Company also proposed an increment in its tariffs by over 300% to be able to, at least, recover its operational cost. The proposals have generated huge public discussions, with a majority of the public kicking against the request.
The Public Utilities and Regulator Commission is currently holding broad consultations with all stakeholders, including Members of Parliament, on the proposals and will make a final announcement on the agreed percentage increase it will allow. It has up to July 2022 to announce the new utility tariffs.