Ghana Electricity tariff reduced by 25%

 

Government has announced a reduction in electricity tariff by 25 percent. This means consumers will now pay 59.18 percent as against the 78.9 per cent announced by the Public Utilities Regulatory Commission (PURC)

A communiqué signed by a deputy Minister of Information and Media Relations, Felix Kwakye Ofosu, Sunday said the reduction forms part of measures taken by government to cushion the effects of the utility tariff increases on consumers.

"The starting point of the electricity tariff increase towards full cost recovery has been reduced by 25 percent. That means the starting point towards the full cost recovery reduces from 78.9% to 59.18% with effect from 1st October 2013."

The communiqué said the decision was taken following a review of the report of the Technical Working Group that was tasked to study the new utility tariffs announced by the PURC.

Government has also asked the PURC to start the implementation of the Automatic Tariff Adjustment Formula (ATAF) from January, 2014.

"The action by Government will translate into a subsidy of over GH? 400 million to be paid to the utility companies to maintain a steady supply of energy."

BELOW IS THE COMMUNIQUÉ

Government has closely followed the developments in the country since the Public Utilities Regulatory Commission (PURC) announced increases of electricity and water tariffs by 52 percent and 78.9 percent respectively with effect from 1st October 2013.

Consequently, Government set up a Technical Working Group to study the new tariffs and submit a recommendation for consideration. After reviewing the report of the Technical Working Group and in consultation with the social partners including Ghana Employers’ Association (GEA), Association of Ghana Industries (AGI), Ghana Chamber of Commerce and Organized Labour led by the Trades Union Congress (TUC), the following measures have been taken to cushion the effects of the utility tariff increases on consumers:

1.The starting point of the electricity tariff increase towards full cost recovery has been reduced by 25 percent. That means the starting point towards the full cost recovery reduces from 78.9% to 59.18% with effect from 1st October 2013.

2.Since the PURC has already gazetted the 78.9% increase in the electricity tariff, Government will absorb the difference between the gazetted increase of 78.9% and the 59.18% (including all levies and charges) as agreed with the social partners.

3.A full cost recovery for electricity is expected to be achieved within nine months (from October 2013 to June, 2014).

4.The PURC is encouraged to implement the Automatic Tariff Adjustment Formula (ATAF) starting from January, 2014.

The action by Government will translate into a subsidy of over GH? 400 million to be paid to the utility companies to maintain a steady supply of energy. While the full recoverable tariff at the present time amounts to 120 percent increase, Government has accepted the recovery to be implemented over a schedule period using the automatic adjustment formula.

Government also notes the observation that the assumptions underlying these recommendations could change based on certain variables such as availability of more Gas supply for generation and a reduced reliance on expensive light crude oil.

The PURC would in such circumstances factor these changes into any adjustments made in the future under the Automatic Adjustment formula.

Signed.

Felix Kwakye Ofosu

Deputy Minister of Information and Media Relations

(10th November, 2013)