The Association of Ghana Industries (AGI) says Ghanaian businesses will be overburdened if the Public Utilities and Regulatory Commission (PURC) approves the recently proposed tariff increases, without ensuring that efficiency in the power value chain is improved.
The Northern Electricity Distribution Company (NEDCo) and the Ghana Grid Company (GRIDCo) have called for an upward review of electricity tariff by 40 percent and 95 percent respectively.
The providers explained that the reduction in utility tariffs in 2018 negatively affected their revenue generation and quality of service provided to customers.
Mr. Kofi Owiredu Ntow, Manager, Marketing Operations for the Ghana Grid Company Limited (GRIDCo) said the pronouncement by GRIDCo for an upward adjustment in utility tariffs was to ensure the company’s long term business sustainability.
He said the company’s inability to complete projects including; the Aboadze 330KV substation expansion, the 330kV Kumasi-Kintampo-Tamale-Bolgatanga line had increased the company’s cost of transmission.
Meanwhile, Mr. Kofi Maxwell Kotoka, Manager, Corporate Communication Officer at the Northern Electricity Distribution Company (NEDCo) said an upward review increase the Distribution Service Charge (DSC) pegged to finance its operations in 2019.
This, he said would also help the company to service the cost of materials and equipment, make a significant investment on infrastructure as well as the needed resources to ensure quality services.
Speaking on the issue with Citi Business News ahead of the PURC’s announcement of new tariffs on February 1, the CEO of AGI Seth Twum-Akwaboah, explained that the approved tariff rates should ultimately help in making Ghanaian businesses competitive within the sub-region.
“Our position is that our tariff level must be competitive. Because we are competing with countries, we are competing with goods coming in from other countries, and therefore if your tariff levels are higher than the comparable countries then it means you have a difficulty in your own market,” he observed.
Mr. Twum-Akwaboah added that businesses are unable to sustain their operations due to the high cost of utility tariffs.
“So when it comes to tariffs, we shouldn’t only look at our environment, we should also look at what happens elsewhere” he maintained.
He stated that even though the AGI is mindful that the power companies need to be supported to ensure they continue of operations, he underscored the need to also enhance efficiency in the system.
“The last thing AGI wants to see are these companies collapsing. But at the same time we also insist on their efficiency level. If you don’t have that efficiency then inefficiency must be passed on to consumers in the form of higher tariffs. When you do that it makes us uncompetitive. So if they are looking for increment then we need to look at the numbers. Are they justified?.”