The Association of Ghana Industries (AGI) has urged the Public Utilities Regulatory Commission (PURC) to suspend its latest electricity tariff increase, arguing that falling global
The report indicates that the Association of Ghana Industries (AGI) has urged the Public Utilities Regulatory Commission (PURC) to suspend its latest electricity tariff increase, arguing that falling global oil prices could soon ease pressure on electricity generation costs.
It further notes that chairman of AGI’s Economic Affairs Committee, Eric Defoe, stated the timing of the adjustment is wrong and warned that its impact on manufacturers could be far greater than the announced increase.
Speaking on Joy News’ PM Express on Tuesday, Mr Defoe stated the 3.5% electricity tariff adjustment may appear modest on paper but could significantly raise production costs.
“It would appear so nominally, but the effect may not be 3.5% on pricing; it may go higher,” he said.
He explained that electricity is only one component of production costs, and any increase would ripple through other elements of manufacturers’ cost structures.
“Like I tried to explain that the other factors in the basket of production may be affected, and cumulatively it may go to five to 10% or anywhere in that band, so if we are not careful, we don’t know what’s going to happen,” he warned.
Mr Defoe argued that recent developments in the global oil market should have prompted the regulator to delay the tariff review.
“What worries us is that petroleum prices went up; therefore, there was some adjustment in the market, but they’re coming down now because the US-Iran war has ended, and prices are falling back.”
According to him, fuel prices form part of the tariff adjustment formula and should be reassessed before any increase takes effect.
“So, at this time, that is also one of the components in the tariff adjustment structure. So, if that’s going to go down, and at this time we are increasing tariffs, maybe they should wait a little bit more and see what happens.”
He maintained that PURC should not feel compelled to implement a tariff increase simply because it is due under the quarterly review process.
“They don’t have to increase the tariff just because there’s a quarterly review, but they should look at the general market and determine whether it is suitable to do that.”
Mr Defoe also questioned why consumers should shoulder higher electricity costs when they are already contributing through fuel levies designed to support the energy sector.
“Now we’re already providing a lot of resources to mitigate some of the production costs by paying these levies on fuel, right? It makes money available for generation and legacy debts, so why are we going to have to pay more again? Because it doesn’t make sense to us.”
