Executive Director of the Africa Centre for Energy Policy (ACEP), Benjamin Boakye has mentioned that he doesn’t see how electrical energy fees will not be elevated.

He cited the detrimental impression of the Cedi depreciation in opposition to the foremost buying and selling forex particularly the greenback as one of many causes for the tariffs to be elevated.

Speaking on the proposal by the Electricity Company of Ghana (ECG) to the Public Utilities Regulatory Commission (PURC) for upward tariff adjustment, on TV3’sNews 360, Mr Boakye mentioned ” First of all, these are proposals and as is all the time finished, when there’s a main tariff announcement, the utilities will make proposals and PURC will look at the proposals to do additional engagements with stakeholders and decide what the optimum tariffs can be. From the place we sit we do nit see why the tariff wouldn’t go up.

“If you take a look at the final tariff changes and also you low cost that by simply the depreciation of the Cedi, a lot of the funds are made in {dollars}, that alone, the present tariff has obtained about 32 per cent worth.

“That of course, would require that we recover the lost value. Beyond that, the under recoveries of ECG for 2021 was almost 50 per cent of their entre revenue requirement, which means that we need to find ways to recover how much they need to actually survive.”

He added “We needed government to pay ¢1.25 billion dollars just in 2021 to be able to offset the underrecoveries in the space. If you combine that in 2020 under recoveries we are talking of ¢14billion of interventions from the government. That money was far more than we spent on education, infrastructure , in road infrastructure, agriculture infrastructure. we cannot continue to get that support from government when ECG needs to improve its efficiency given the right tariff for them to be able to reduce their reliance on government.”

The administration of the ECG has made a proposal to the PURC to extend electrical energy tariffs by up to 148 per cent masking 2019 to 2022.

The state energy distributor additionally proposed a mean enhance of seven.6% in tariff over the subsequent 4 years to cowl Distribution Service Charges (DSC).

 The attributed the excessive enhance within the Distribution Service Charges 

“The results of ECG’s tariff proposal for the subsequent 5 years reveals an roughly 148% enhance on the present DSC1 in 2022 and a mean enhance of seven.6% yr on yr from 2023 to 2026.

“The high increase in the DSC1 for year 2022 could be attributed to the gap that has developed over the years 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% in first year (2022) while that of the subsequent years’ increases by an average of 2% from 2022 to 2026”, it added.

The administration of ECG additionally indicated that its monetary sustainability is vital because it impacts on your complete vitality sector.

“The financial sustainability of the Electricity Company of Ghana is important as it impacts on the entire energy sector. With the huge investment needs facing the distribution industry over the next five years, it is expected that the proposed tariff increases would inevitably be approved to sustain efficient and reliable electricity service.”

“Over the next five years, the DSC will need to increase consistently (average of 7.6%) to cover distribution cost. It is expected that the approved BGC would correspond with the commercial terms of PPAs (Power Plant Agreements)”, it added.

By Laud Nartey|3news.com|Ghana