Two highly placed sources involved in the negotiation and setting of the tariffs confided in the Daily Graphic that while electricity tariffs would go up by between 10 and 12 per cent, those of water would be increased by less than 10 per cent.

The increases would be across the board for both residential and commercial consumers throughout the country, according to one of the sources, who was not authorised to speak on the matter.

“It will be less than 12 per cent for electricity for both residential and industrial users and less than 10 per cent for water across the country,” it said.

Negotiation with PDS

While admitting that the announcement of new utility tariffs had delayed by about six months, the source said the tariffs that would be announced today would not take retrospective effect but become operational from July 1.

“We are not going back because there was an understanding that the PURC has been working with Power Distribution Services (PDS) when it took over from the Electricity Company of Ghana (ECG) on April 1, this year, and all those have now been factored into the new tariffs,” it explained.

The new tariffs will replace those that were announced and took effect in March 2018.

Reason for increases

The source explained that but for the renegotiation of gas prices, which reduced the cost of gas used to generate power, and the relocation of the Karpowership from Tema in the Greater Accra Region to Atuabo in the Western Region, the tariff increment for electricity would have been higher than planned.

“With the movement of the Karpowership from Tema to Atuabo, they will cut the fuel intake by almost 50 per cent and that is why they are able to make these savings and bring the tariffs down,” it said.

The relocation of the power ship is scheduled to take place in August this year and it will make it possible for the power generation vessel to switch from the use of heavy fuel oil (HFO) to generate electricity to natural gas.

Cause of delay

When asked why the PURC delayed in announcing the new tariffs, one of the sources said negotiations between the commission and the PDS stretched more than anticipated.

“They wanted to finish the negotiations that they were doing and with that the only effect on the tariffs will now be foreign exchange and other operational costs,” it added.

As of press time yesterday, it was understood that the Ministry of Energy was meeting utility providers in the power sector over the new tariffs due to be announced today.

Gas prices

In a proposal submitted to the PURC in November last year, the ECG, whose core mandate has now been transferred to PDS, requested for an average tariff increase of about 37 per cent to enable it to make up for the increasing cost of production.

The Executive Director of the African Centre for Energy Policy (ACEP) said his outfit was reliably informed that electricity tariffs were originally planned to go up by 30 per cent but it was later reduced after successful renegotiations of power purchase agreements (PPAs) and the price of gas.

He said the renegotiation saw gas prices dropping from around $8 per metric million British Thermal Unit (MMTBu) to about $6.8MMTBu.

He also mentioned the proposed relocation of the Karpowership, which will allow for a switch in fuel consumed, as another major development that influenced the tariffs on electricity that the PURC would be announcing.

The commission, which regulates the provision of utility services in the country, is mandated by the PURC Act (1997), Act 538, to set tariffs for water, electricity and the transportation of natural gas.