Kapito: Proposal for over 100% increment of utility tariffs absurd

Kofi Kapito, the chief executive officer of the Consumer Protection Agency (CPA), has described the proposal from the various utility service providers for tariff increment as absurd and ridiculous.

According to him, the utility service providers should rather pitch realistic percentages that will suit all stakeholders.

Speaking to Gemma Appiah on The 12 O’Clock Report on Friday (13 May), Kapito said, “I don’t know of any business in the world that will ask for a 148% and the other company will ask for a 334% [increment]. It is absurd, ridiculous. Yes, you need an increase, just come up with some realistic percentage that can be supported by all stakeholders including the good people of Ghana.

“I am old enough and I understand the economics that a single or double-digit number will be the best thing, but for you to add more than that, is a little bit on the higher side. We (CPA) were part of the stakeholders meeting at Alisa [hotel], ACEP and all kinds of agencies were there and believe me, I think apart from the utility companies, nobody who was there agreed with the increase or percentage that they were asking for,” he said.

Listen to Kapito in the audio below:

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Upwards adjustment

Meanwhile, the Electricity Company of Ghana (ECG) in its proposal is demanding a 148% increase in tariffs.

A proposal from the power distributor submitted to the Public Utilities Regulatory Commission (PURC) wants the adjustment to cover the period 2019 to 2022.

ECG has subsequently proposed an average increase of 7.6% in tariffs over the next four years to cover distribution service charges (DSC).

ECG attributes the high increase in distribution service charges to the gap that has developed over the years between the actual cost recovery tariff and the PURC-approved tariffs, as well as the cost of completed projects.

It also mentions the continual application of the prevailing tariff (which is 14% lower) beyond the stipulated regulatory period and the effect of macroeconomic factors such as inflation and exchange rate fluctuation.

Also, the Ghana Water Company Limited (GWCL) also demands a 334% increase in tariff.

The GWCL, in its proposal, said over the years that the approved tariffs have not been fully cost-reflective.

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