Authorities approves major hikes in electricity, water tariffs

December 8, 2015 7:03 AM

The main opposition party condemned the hikes, which are to take effect on December 14, and said it would block implementation.

Overhead power lines of the Estonian power distribution company "Elering" are pictured in Tallinn, Estonia, September 30, 2015. REUTERS/Ints Kalnins

Ghana's utility regulator increased tariffs for electricity and water by up to 89 percent on Monday in a renewed bid to attract competitive private investment to the sector as the West African nation grapples with a crippling power crisis.

Electricity prices were put up by 59.2 percent and water by between 69 percent and 89 percent depending on usage, the Public Utilities Regulatory Commission (PURC) said in its first major change in tariffs since 2013.

"It is the highest level of insensitivity ever witnessed by Ghanaians under the Fourth Republic, and certainly just before Christmas and in a year that Ghanaians have known nothing but untold sufferings and hardships. It should not happen," the party said in a statement.

The PURC said the increases, which had been delayed for several months to allow it to sensitise the public to the need for such a move, were driven largely by a shift from a cheaper hydro-dominated generation mix to thermal power.

They were also to make up for increasing chemical and power purchase costs incurred by the water company, it said.

"The significant change and the increasing dependency on thermal generation has greatly impacted the cost of electricity generation by the utilities service providers," it said.

The West African country is grappling with a chronic power crisis that has crippled industrial growth and forced the government to contract emergency powerships to make up for a supply shortfall of up to 500 megawatts.

Nana Yaa Dzantua, head of external affairs at the PURC, told Reuters that despite the increases, about 32 percent domestic lifeline consumers would still enjoy subsidies on power.

The rises were also in fulfilment of Ghana's three-year aid deal with the International Monetary Fund which the government signed in April to restore a fiscal balance and fix the power crisis. The pact has reduced the government's popularity.

Monday's tariff hikes are expected to further push up consumer inflation, which stood at a four-year high of 17.4 percent in October.

"The utilities constitute basic expenditure for households and considering the fact that these increases are coming in December when there is already pressure on spending, we expect to see some additional inflation pressure," said Sampson Akligo of the Accra-based Investcom group.