The President of the Ghana Union of Traders' Associations (GUTA), Clement Boateng, has criticized recent utility tariff increases, arguing that current economic conditions do not justify the adjustments. He noted the Public Utilities Regulatory Commission (PURC) announced third-quarter tariff reviews, raising electricity tariffs by 3.49% and water tariffs by 0.85%.
PURC attributed the latest increases primarily to exchange rate pressures. However, Mr. Boateng contended that the depreciation of the Ghana cedi was too modest to warrant such significant hikes. He highlighted this despite a decline in inflation and stable electricity generation levels across the nation.
This dispute occurs as Ghana continues to navigate economic challenges, including cedi depreciation against major foreign currencies. The utility tariff adjustments add to the cost of doing business and living expenses. Such increases directly impact businesses' operational costs and consumer purchasing power.
Speaking on Joy FM, Mr. Boateng stated GUTA is not fundamentally opposed to tariff reviews. He acknowledged the need for utility service providers to secure adequate resources for their operations. However, he maintained that PURC’s justifications for the latest increases do not align with current economic realities.
“It is true that the exchange rate has experienced some depreciation recently,” Mr. Boateng explained. “Between April and May, the average depreciation was about 4.18 per cent. We believe this is insignificant and does not call for an increase in utility tariffs.”
Mr. Boateng further argued that operational inefficiencies within utility companies are the core issue. He cited significant operational losses in both the Ghana Water Company and the electricity distribution system. These losses stem from theft, illegal connections, and wastage, he noted.
For instance, he mentioned the Ghana Water Company records operational losses of between 51% and 52%. Operational losses in the electricity sector are around 32%. He urged utility providers to focus on reducing these internal losses instead of relying on periodic tariff increments. This approach would stabilize their revenues without overburdening consumers and businesses.
The call by GUTA for utility companies to address their operational inefficiencies puts pressure on PURC and the government. They must consider the broader economic impact of tariff adjustments. Future policy decisions will likely weigh the financial health of utility providers against the economic resilience of businesses and consumers. Stakeholders will watch closely for any policy changes or actions aimed at reducing utility losses.