The Trades Union Congress (TUC) has expressed vehement disapproval over the proposed utility tariff increments put forth by the Ghana Water Company Limited (GWCL) and Electricity Company of Ghana (ECG).
This concern comes on the back of a proposed increment in water tariffs of 334 percent and 148 percent for electricity by the GWCL and ECG respectively for approval by the Public Utilities Regulatory Commission (PURC) in 2022. However, the TUC said these demands will compound the suffering of businesses and citizens.
According to the TUC, the current economic environment is unfavorable for any upward adjustment in utility tariffs as businesses have still not fully recovered from ravages of the COVID-19 pandemic, coupled with the ongoing Russia-Ukraine war.
“It is the view of the TUC that it is inappropriate to undertake a major review of utility tariffs in the current economic situation. The Ghanaian economy has not fully recovered from the ravages of COVID-19. In fact, new challenges have emerged to compound the COVID-related challenges.
“Incomes have fallen by more than a third in the last two years. Many of those that lost their jobs are still without their usual jobs. The general price level has more than tripled since wages and salaries were last reviewed in the public sector. For instance, inflation in May 2022 was 27.6 percent.
“The major tariff review should therefore be postponed until the cost-of-living crisis is over,” it stated in a document that highlights its perspective on the proposal.
TUC holds that what should be done now is to employ measures which reduce waste to the barest minimum and infuse efficiency in operations of the utility companies, as it believes this will help to sustain them over a long period of time.
“In these challenging times, what’s needed is not the astronomical increases being demanded by the utility companies. Rather, we need measures which ensure that the utilities are kept afloat until the economic storm passes. These measures should not be tariff increases. There must be other pragmatic steps the utility companies can take to improve operational efficiency. Government can also step in to reduce the burden on Ghanaians,” it stated.
The Union urged government to continue supporting the utility companies to undertake some of the critical investments needed for ensuring the stability of electricity and water networks.
“For electricity, this means supporting the planned investment by VRA to expand generation in line with the energy supply plan of the country. It will also require supporting the Ghana Grid Company to strengthen its transmission lines to reduce overloads on the various bulk transmission lines and power stations. Government will also have to make fiscal allocations for the costs of reserve margins and idle capacity (excess capacity charge),” it recommended.
Fix desalination plant issues
It further called on government to address challenges posed by the Desalination Plant, saying the contract details are unfair.
“Government should address the challenges posed by the Desalination Plant once and for all. This is a 25-year take or pay contract that is so unfair to Ghana. At the current rate, GWCL is obliged to pay Befesa Co. Ltd. US$1.3million every month whether the company produces water or not. During periods of the year (August) when the turbidity levels of the sea water are such that the Befesa Plant cannot produce the required water, GWCL is still obliged to pay the company.
“The company (Befesa) has consistently failed to provide the contracted volumes of water. The contract cannot be abrogated even when the company consistently fails to produce water for which the contract was signed. This is a bad contract that should never have happened. Ghana must do whatever it takes to ensure the review of this unfair contract,” it added.