The Public Utilities Regulatory Commission (PURC) has announced an upward review of water and electricity tariffs for the third quarter of 2024.
The new tariffs, which take effect July 1, 2024, will push water up by 5.16 per cent for all customer class while electricity jump by 3.45 per cent for lifeline consumers (0-30 kWh), 5.84 per cent increase for all other residential consumers who are not part of lifeline category bracket (31kWh- above) as well as non-residential category.
The commission also approved an increase of 4.92 per cent in electricity tariff for the industrial category for the period under review.
Factors for review
A statement issued on Friday, May 31, 2024 and signed by the Executive Secretary of the PURC, Dr Ishmael Ackah, said the new tariff review was occasioned by several factors including the cedi depreciation, rising inflation, cost of fuel as well as electricity generation mix.
“The commission wishes to inform consumers of electricity and water that there has been a review of the existing tariffs, to take effect from July 1, 2024, to September 30, 2024,” he said.
He explained that these reviews have been undertaken in line with the commission’s Quarterly Tariff Review Mechanism, which tracks and incorporates movements in key uncontrollable factors, namely the exchange rate between the United States Dollar and the Ghana Cedi, domestic inflation rate, the electricity generation mix, and the cost of fuel, mainly natural gas.
He said these reviews were undertaken to maintain the real value of the tariffs, thereby keeping the utility service providers financially viable to enable them to deliver on their services to consumers.
He said the commission, in undertaking this review, also considered the competitiveness of industries and the general living conditions of Ghanaians.
“The industrial category will experience an increase in electricity tariffs of 4.92 per cent. Water Tariffs will experience an increase of 5.16 per cent for all customer classes for the period under review,” he said.
Revenue requirement for electricity
Dr Ackah explained that total revenue requirement for the first quarter of 2024, amounted to GH GH¢5.67 billion.
He said in the second quarter, the revenue requirement was projected to be GH¢6.81 billion. This will result in an increase of GH¢1.14 billion over the first quarter revenue requirement.
Feed The Future
He said the commission, however, decided to recover GH¢5.90 billion of the GH¢6.81 billion required for the second quarter.
He said this decision was taken by the commission taking into consideration the revenue collection performance of the sector, since continuous increase in tariffs have not yielded the corresponding increase in revenue collection by the utilities to cover sector expenditure.
In addition, the Executive Secretary noted that the commission considered the negative effect of passing on the entire revenue required in one tranche on customers.
That, he said, was the difference of GH¢906.21 million, which would be recovered in subsequent quarters.
Dr Ackah noted that total revenue requirement for the water sector in the first quarter of 2024, amounted to GH¢635.86 million.
“Revenue requirement for the second quarter of 2024 amounted to GH¢670.18 million. An additional GH¢34.33 million needs to be recovered in the second quarter of 2024.
“The water tariff has been adjusted upwards by 5.16 per cent,” he said.
He expressed the gratitude to all stakeholders for their support as it continues to implement these Quarterly Tariff Reviews to address the ever-changing needs of the utility service providers to enable them undertake their efficient operations.
