ECG’s 148% tariff hike proposal nothing to do with dumsor fears – Mercer

The demand by the Electricity Company of Ghana for a 148 per cent hike in tariff is not a harbinger of dumsor, Deputy Energy Minister Andrew Egyapa Mercer has said.

Mr Mercer said on Tuesday, 10 May 2022 that the government has engaged Independent Power Producers (IPPs) for additional power capacity to augment the current power generation efforts.

“I do not foresee that we are going to have dumsor anytime soon”, he told asserted, stressing: “I do not foresee that the conversations that are actually ongoing today will lead to dumsor anytime within the foreseeable future”.

“Like I indicated, the Energy Commission has a demand forecast system that projects additional power generation that government from time to time ought to add to the generation mix,” he said.

“We are following that [power generation mix] strictly and will ensure that there are no gaps that would then lead to deficiency in our generational capacity that could result in lack of electricity for our consumers. That I can assure you is what we are doing,” he told Accra-based Joy News.

The ECG recently proposed that the Public Utilities and Regulatory Commission allow the power distributor to charge 148% more as a tariff for 2022

It also wants 7.6% average adjustments between the periods of 2023 to 2026.

The ECG said in a 55-page document that the gap between the actual cost recovery tariff and the PURC-approved tariffs as well as the cost of completed projects is too wide and must be closed.

“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.”

“Overall, this tariff proposal indicates a high increase (148%) in the year 2022 compared with the subsequent years’ increases of an average of 7.6%”.

“This high increase in 2022 is largely attributable to the cost of investment projects; the gap that has developed over the years between the actual cost recovery tariff and the PURC approved tariffs; the continual application of the prevailing tariff (which was a 14% reduction) beyond the stipulated regulatory period (2019-2020); and the effect of macroeconomic factors,” ECG said in the document.

It is also proposing an increase of 28.4% in 2022 for Distribution Service Charge (2) which is the rate electricity distribution companies recover distribution losses.

For this set of charges, there is a proposal for an average increment of 2% from 2023 to 2026.


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