KT Hammond punctures PURC’s justification of utility price hikes


The Ranking Member on Parliament’s Energy and Petroleum Committee, KT Hammond, says reasons stated by PURC as accounting for the latest upward adjustment in utility tariffs are bogus.

Mr Hammond said on Top Story on Joy FM Tuesday that factors that informed the automatic utility price adjustment by the PURC like the cedi-dollar ratio and price of crude oil should have resulted in a reduction in the cost of electricity and water.

“We have just been told that the cedi is now depreciating the dollar, what is the rationale in what we are being told?” a furious KT Hammond asked show host Evans Mensah.

The Public Utilities and Regulatory Commission reviewed upwards, electricity and water tariffs by 6.45 and 4.54 percent respectively — a second of such price hikes this year alone.

Cedi USD Exchange Rate, Inflation, Price of Crude Oil and Natural Gas, Fuel Mix (Crude Oil, Natural Gas, and Distillate Fuel), Generation Mix (Hydro and Thermal), Power Purchase Cost, among others informed the PURC’s adjustment.

In July this year, electricity tariffs went up by 6.1 percent while water tariffs were increased by 12 percent.

The PURC explained the marginal increases in the current adjustment have been necessitated by the shift to crude oil for generation of power occasioned by erratic gas supply from Nigeria.

But these reasons, according to New Patriotic Party (NPP) MP for Adansi Asokwa in the Ashanti Region, should rather bring down utility prices.

“I don’t accept that the shift is now in favour of thermal rather than hydro. Even if that is true it is just an insignificant part of the whole relationship. The real [issue] is the price of the crude and that of course the dollar-cedi relationship”, he argued.

According to him, so far as the price of crude has gone down, there should be a corresponding drop in cost of electricity.

PURC also cited “challenges being faced with the erratic nature of Gas delivery from the West African Gas Pipeline (WAGP) in Nigeria” as one of the reasons for the upward review of utilities.

But “It is a complete ruse”, Mr Hammond said.
“2001 to 2008 there was not a single gas produced from anywhere in the generation mix, but we produced electricity in this country. Saying that erratic supply of gas from West African Gas Pipeline is the problem is neither here nor there”, he added.

He said the PURC, although by law is expected to independent, is in fact not – and the current upward review is a clear sign of the PURC’s subservience to government control.

Mr Hammond said even though the NPP pushed for an Automatic Adjustment Formula (AFF) during their tenure in government, the policy does not necessarily mean that there must always be an upward review.

In a reaction to Mr Hammond’s assertions, Public Affairs Director of the PURC, Nana Yaa Gyantuah, said although it is true that there has been a drop in the price of crude oil, the many power producing plants in the country rely on crude oil and more of it too.

“We are looking at an issue where we are using more volumes because there is a dependency of crude because there is inadequacy of gas coming through at Atuabo”, she said.

She also said the Akosombo, Bui and Kpong dams are not dependable because of their low water levels, indicating that there is cause for even more reliance on gas to power thermal plants.

“We should also not forget the fact that our demand is increasing. Even though a yearly average is 12% per annum, which is even better than last year December [10% per annum] in the quarter that we are going into, we are going to do something like 15%”, she said.

Meanwhile  many Ghanaians have expressed frustrations at the recent utility price increases.

 
Story by Ghana | Myjoyonline.com | George Nyavor | [email protected]

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