Proposed ECG tariff reduction timely but… – ACEP

The Africa Centre for Energy Policy (ACEP), has welcomed government’s proposed reduction of electricity tariff by between 13 and 21 percent for domestic and industrial consumers.

According to ACEP, although the proposal is timely, it will put the Public Utility Regulatory Authority (PURC), the body mandated to consider the review, in a tight corner especially when the approved tariff does not tally with government’s proposal.

The Minister of Finance, Ken Ofori-Atta, while presenting the 2018 budget statement to Parliament, announced that government has recommended the review of electricity tariff by between 13 to 21 percent to the PURC.

ACEP in its analysis of the budget in relation to the energy and oil and gas sectors, said the situation can “weaken the independence of the institution [PURC].”

“This effort is timely…The 13% proposed reduction will be about 25% on the dollar rate at the time the tariff was last reviewed in 2015. It is however challenging to see the budget prompting the level of reduction before PURC does its job of reviewing the tariff.

This puts PURC at war with public expectation of what government thinks is the reductions that should happen. It further weakens the independence of the institution whose acting Executive Secretary is waiting on government for confirmation,” ACEP noted in a statement copied to Oman FM.

ACEP recommended to government to focus on how to reduce the bottlenecks that contribute in making electricity tariff too high.

“Government should focus on shaping the fundamental variables that contribute to cost. These include fuel cost, competitive tendering of plant procurement to reduce the cost, bureaucracies in the sector, etc.

Consideration of these variables will go a long way to reduce inefficiencies in the sector and allow the regulator to do independent adjustments and announcement of the tariff,” the policy think tank added.

ACEP in its 10-page analysis also made a number of recommendations to government including how to judiciously expend Ghana’s oil money going forward.

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