- say it will severely impact business operations
The Ghana Hotels Association president, Dr. Edward Ackah-Nyamike Jnr, has described the proposed utility tariff adjustment as ill-timed and says that its implication for business operations will be severe.
The Ghana Water Company Limited (GWCL) and Electricity Company of Ghana (ECG) have proposed upward tariffs adjustments of 334 percent and 148 percent respectively to the Public Utilities Regulatory Commission (PURC) for approval for 2022.
Though still under review, Dr. Ackah-Nyamike Jnr. said the current economic challenges coupled with the COVID-19 impact have already placed businesses in a tight corner, especially with industries such as the hotels trying hard to recover; hence, such tariff adjustment will worsen the case.
“The tariff adjustment’s timing is very uncomfortable, coming on the heels of the pandemic with all the challenges it brought. We are trying to get back on our feet, and then we will be hit with this proposal suggesting a huge adjustment… We are for ECG and GWCL being efficient and effective on the ground and so we are not against tariff adjustments, but we also believe it must take into consideration the impact on the economy and on businesses including hotels who depend hugely on those two,” he said in an interview with the B&FT.
Businesses could fold up
He holds that about 30 percent of hotels’ expenses are the result of water and electricity tariffs, and any upward adjustment will have a toll on the industry – adding further it is the hope of many businesses PURC will do the needful to make sure it approves rates which are reasonable.
“COVID-19 got a lot of hotels into debt; the recovery started from May 2021 to 2022, when we started seeing some stability. So, we are still dealing with the debts that were accumulated in 2021. Water and electricity form a significant part of our operations.
“Indeed, putting water and electricity together, you are looking at between 15 percent to about 25 percent of our expenses. Some can even go as high as 30 percent. With such a high percentage going into utilities, when there is an upward adjustment it will affect a lot of businesses. If there are adjustments to the extent they are talking about, some of the hotel businesses will fold-up. Some will not be able to deal with it,” he added.
High cost of operation
Dr. Ackah-Nyamike Jnr, who was also speaking on the high cost of living and how it’s affecting business activities, attributed the relatively expensive hotel rates to the nation’s high cost of living.
“The cost of living has a huge impact on businesses, especially the hotels, because they depend a lot on disposable income. And a lot of business that’s received at hotels is for either business, adventure or leisure, and these are arranged after basic needs or necessities are taken care of. So, when the cost of living is in such a way that income can only cater for basic needs, then there’s nothing left to spend. And this also increases operational cost,” he said.
The nation’s cost of living is reflected in the Ghana Statistical Service’s figures, which revealed that the continuous increase in food and transport prices across the country have pushed the national year-on-year inflation for May 2022 to 27.6 percent from 23.6 percent in April 2022.