Tariffs Hike Will Dampen Recovery, Employment – AGI

The recent hikes in electricity and water tariffs could dampen hopes of business recovery and employment prospects, the Association of Ghana Industries (AGI) has warned.

The Public Utilities Regulatory Commission (PURC) last week announced an upward review of electricity and water tariffs for the first quarter of this year. The new tariffs – which take effect February 1, 2023 – will see monthly electricity and water bills go up 29.96 percent and 8.3 percent respectively across the board for all customers. With this, it means within a period of less than six months, electricity tariffs have shot up significantly on two occasions – 26.6 percent in September 2022 and 29.9 percent for this quarter, totalling 56.5 percent; water has gone up 48 percent over the same period.

The AGI has however described the level of increments as excessive. Businesses, it said, were hoping to see signs of recovery this year, having been under pressure from an unstable business environment coupled with so much uncertainty since last year; hence, the recent increase in utility tariffs could spell doom for recovery and employment prospects.

“The level of utility tariff increments for water and electricity as captured in the PURC’s release are too high for industry to bear, particularly at this time,” its Chief Executive Officer, Seth Twum-Akwaboah, said in a statement to the B&FT.

While acknowledging that the review is in line with the quarterly automatic adjustment as required of the regulator, it said the timing and level of increments will throw cold water on businesses’ ability to recover from economic downturns of the last few years.

“We reckon that our utility companies need to recover cost to sustain their operations, but when end-user tariffs get to unbearable levels the effect could be dire for both industry and the utility companies,” AGI said.

It further bemoaned that elements of cross-subsidy, industry subsidizing tariffs for residential consumers are still embedded in the tariff structure, with the latest review failing to honour PURC’s effort to correct this anomaly.

“We therefore urge the PURC to expedite action toward full reversal of the tariff structure in support of government’s industrial transformation agenda,” Mr. Twum-Akwaboah added.

Apart from asking the PURC to address what it believes is a punitive tariff regime, AGI urged government to ensure efficient utility infrastructure and logistics management to save cost in these difficult times. “We expect government to control macroeconomic instability – a major trigger and driver for such sudden changes in tariffs-level and price hikes.”