Research and Public Policy Think Tank, CUTS Ghana, which has petitioned the Public Utilities Regulatory Commission,(PURC) to reduce electricity tariffs to reflect the current cost of generation, says the call is valid despite the newly announced interventions by government.
Lifeline consumers of electricity are to enjoy free power for three months, whereas all other consumers will see a reduction of 50%.
The group argues that in the light of falling prices of fuel on the world market, it is fair and reasonable for the PURC to consider a tariff review to give relief to businesses and consumers.
In an interview with Citi Business News, CUTS Ghana’s Country Director, Appiah Kusi Adomako, said it is not too late to reduce the tariffs especially at this time, to save government from paying more to power producers.
“The cost of generation has gone down. When this happens, it means you can sell things cheaper. I think government could have waited for PURC to do the mathematics and come up with a review. If that was very forthcoming, then the President would have allowed the PURC to immediately convene a board meeting and approve a tariff reduction based upon the cost of generation. Then, the President can also cut in, so that we don’t burden the state so much because currently power producers are making a windfall and this is going to them,” he said.
“Government will still have to be paying the money to them because it agreed to absorb fifty percent. This means you have to continue to pay the fifty percent of the cost of generation. I think in fairness also, the PURC could also come back and say based upon these factors, the cost of generation has come down. It means the amount of money government will pay to the power companies will still come down so it’s still not too late for the PURC to act based on the cost of generation and its downward trend,” he added.
Mr. Kusi Adomako also added that, CUTS Ghana has a challenge with why Independent Power Producers still have financial challenges when in essence; Ghanaians are paying for the full cost of electricity.
“The issue also of the independent power producers running out of cash is not something that I totally agree, because currently we are paying for full cost of electricity and even there is also additional levy on it to cover part of the debt owed in the energy sector. So, I don’t know where the money we are paying is. Somebody would have to come and tell us. We pay for the cost of the power that we consume at the market rate as there is no subsidy on it unless those under lifeline consumption,” he stated.
The outbreak of the novel Coronavirus in the country, necessitated a partial lock-down in Greater Accra, Tema, Kasoa and Kumasi. This caused many businesses to grind to a halt, resulting in financial conditions being tightened.
Following this, many individuals and groups called on the President to absorb some basic amenities in the country, including electricity tariffs.
Key among them were the Minority in Parliament and former President John Mahama who argue that absorbing the tariff will help ease the burden on Ghanaians amidst the COVID-19 outbreak.
Meanwhile, the Institute of Energy Security, IES, has revealed that government’s decision to absorb the cost of electricity for consumers for three months will cost an estimated 450 million dollars.