The Trades Union Congress (TUC) has rejected the Electricity Company of Ghana (ECG) proposal to increase tariffs by up to 148% from 2019 to 2022.

TUC Deputy Secretary General Joshua Ansah stated that the ECG’s demands are inappropriate at this time.

He stated that Ghanaians face enormous economic challenges, and that the government must find a way to alleviate the hardships.

“These increases are not appropriate at this time.” As a country, we are facing enormous economic challenges, rising inflation rates, rising food prices, high cost of living, and so this is not the right time,” he told TV3’s Daniel Opoku on Tuesday, May 10.

“We have a government that should listen to the citizens and intervene to help the citizens,” he added. As a result, we anticipate that the government will step in to ensure that this proposal is not accepted. For my part, the government should not support the proposal until worker wages are raised.”

The ECG’s management has proposed to the PURC an increase in electricity tariffs of up to 148% from 2019 to 2022.

The state power distributor also proposed a 7.6 percent average tariff increase over the next four years to cover Distribution Service Charges (DSC).

The high increase in Distribution Service Charges was attributed to

“The result of ECG’s tariff proposal for the next five years shows an approximately 148% increase on the current DSC1 in 2022 and an average 7.6 percent year on year increase from 2023 to 2026.”

“The high increase in the DSC1 for 2022 could be attributed to the gap that has developed over time between the actual cost recovery tariff and the PURC approved tariffs, as well as the cost of completed projects.”

“Similarly, ECG’s proposed DSC2 shows a higher increase of 28.4 percent in the first year (2022), with subsequent years’ increases increasing by an average of 2 percent from 2022 to 2026,” it added.

ECG’s management also stated that financial sustainability is critical because it affects the entire energy sector.

“The financial sustainability of the Electricity Company of Ghana is critical because it has ramifications for the entire energy sector.” With the distribution industry facing massive investment needs over the next five years, it is expected that the proposed tariff increases will be approved in order to maintain efficient and reliable electricity service.”

“Over the next five years, the DSC will need to rise steadily (at a rate of 7.6 percent on average) to cover distribution costs.” The approved BGC is expected to correspond with the commercial terms of PPAs (Power Plant Agreements),” it added.

Similarly, the Ghana Water Company (GWCL) management proposed to the PURC an increase in water tariff.

According to the GWCL proposal, approved tariffs have not been fully cost reflective over the years.

As a result, GWCL has been unable to generate sufficient revenue to fund much-needed capital investment projects, resulting in an unsatisfactory level of service, according to the company.

“Water can be a critical resource in short supply among the urban poor.” As a result, GWCL established a Low-Income Customer Support Department (LICSD) to provide improved services to low-income urban poor areas.

“The Government of Ghana is committed to expanding access to safe water supply services in urban areas with particular focus on improving water production and expansion of distribution systems and ensuring sustainable financing of the sector. It is estimated that about $2billion will have to be invested in water production to help increase current urban coverage to 100% country-wide by 2025.

“Notwithstanding the challenges mentioned above, it is important to consider the broad sectoral focal areas that impact on water operations. These include sustainable water sources, access to potable water, sustainable financing, improved public private partnerships, capacity building, good governance, good research and development, monitoring and evaluation, water safety and customer interest/education.

“GWCL therefore has embarked on an image redeeming mission, for transformation into a ‘world class utility company’. We therefore call on our Regulator, the PURC, to provide every necessary support to enable us turn things around,” the proposal said.

It added “Like any utility, GWCL is expected among others to: Provide services that are safe, desirable, and affordable to consumers; and Ensure an institutional and commercial system capable of recovering costs.

“GWCL must at least recover its costs if we are to sustain our operations. Over the years, however, the approved tariffs have not been full cost reflective. This has led to the inability of GWCL to raise enough revenue to finance the much needed capital investment projects, with a consequent unsatisfactory level of service.

“Below are some major issues which have prevailed since the last tariff adjustment, and which have necessitated this review. Inadequacy of tariff to carry out urgent repairs of assets and minor extensions Unlike the previous years where the Automatic Tariff Adjustment Formula (ATAF) has been applied every quarter, PURC has not applied it for some time now.

“In real terms the average tariff per cubic meter in 2019 was USD 1.27, but has reduced to USD 1.13 as a result of the cedi depreciation over the period as shown in the figure below.

“This has affected our ability to carry out repairs and replacement of aged and obsolete equipment and pipelines, and other critical assets as would be expected and has given rise to high levels of NRW. As part of this proposal GWCL has included measures to reduce NRW for the consideration of PURC.

“The PURC should also play a significant role in making water services available to low income dwellers in the country through the review and approval of a ‘GWCL Low Income Distribution Extension Fund’. The terms which should cover this arrangement would be that GWCL shall extend pipelines to low income communities and new consumers.”