Reports reaching The Herald is that, a deputy minister – name withheld for now- in the Akufo-Addo government, has been accused of hijacking a huge amount of cash meant to soften the ground for the Public Utilities Regulatory Commission (PURC) over its recent tariffs increment after the 2023 second quarter tariff review decision for natural gas and electricity.
The cash amount of about GH¢2 million, was reportedly taken to the Presidency; Jubilee House to be dished out to various interest groups to shut them up over the PURC’s 18.36percent increment in electricity and natural gas across the board for all consumer groups.
Government had expected a backlash, hence dished out the money to pay off people. This was because the end-user tariff for electricity had in the first quarter of this year been increased by 29.96 percent, while that of water had also seen an upward adjustment by 8.3 percent, following the conclusion of the PURC’s regulatory processes for quarterly adjustments.
This paper is informed that the Deputy Minister, who sat at the meeting when the decision was made, took the money to carry out the payments, but reports are he cannot account for the money, he claimed within a matter of hours that he has shared colossal sums to some people, including government’s partners in the media.
A lot of murmuring is ongoing at the PURC, the Office of the President and the Ministry of Energy, with many asking how the deputy minister, could blow the huge amount in a matter of hours.
Some have sought to get the deputy minister to submit the names of the recipients of the cash for confirmation, but this has not been possible leaving doubts in the minds of those who sat in the meeting at Jubilee House as to whether the slush fund was released to the intended beneficiaries.
The decision for the PURC’s 18.36percent increment was taken after a review for the second quarter of 2023.
The Commission in a statement dated May 17, 2023 had explained that the decision was taken to balance the prevention of extended power outages and their adverse implications on jobs and livelihoods while minimizing the impact of rate increases on consumers.
The Quarterly Tariff Review Mechanism, seeks to track and incorporate changes in key factors used in determining natural gas and electricity tariffs.
The PURC blamed the Ghana Cedis/US Dollar exchange rate, inflation, electricity generation mix, and the weighted average cost of natural gas (WACOG) as the factors that influenced the latest increment.
“This review has become necessary to maintain the real value of the cost of supply of the utility services and to ensure that the utility companies do not under or over-recover costs.
“While under-recovery has negative implications for the ability of the companies to supply service to consumers, and has the potential of causing outages of electricity, over-recovery unnecessarily overburdens consumers of electricity.
On Monday, January 16, 2023, the PURC announced that utility tariffs were to go up in the first quarter of 2023 effective February 1, 2023 despite admitting the present economic challenges.
“The PURC is equally mindful of the current difficult economic circumstances but notes that the potential for outages would be catastrophic for Ghana and has to be avoided. The PURC, therefore, sought to balance prevention of extended power outages and its deleterious implications on jobs and livelihoods with minimizing the impact of rate increases on consumers”.
“The Commission, therefore, decided to increase the average end-user tariff for electricity by 29.96% across the board for all consumer groups (Table i). The average end-user tariff for water has also been increased by 8.3% (Table 2). The Commission, however, approved varying rate adjustments including some reductions for selected industrial and commercial consumers as part of the ongoing restructuring of the existing water rate structure”, the statement added.
For the end-user electricity tariffs payable by consumers, the Commission considered four key factors in arriving at its decision in the first quarter.
These were the Ghana Cedi/US Dollar exchange rate, inflation, generation mix and the weighted average cost of natural gas.
“Since the announcement of the major tariff in August 2022, these key variables underlying the rate setting have changed significantly. For example, the weighted average Ghana Cedi/Dollar exchange rate used for the major tariff review was GHS 7.5165 to the US Dollar. Since then, we have witnessed the depreciation of life Cedi against the US Dollar and other major currencies. The projected weighted average Ghana Cedi US Dollar exchange rate used in First Quarter 2023 Tariff Analysis is GHS10.5421/USD”, PURC stressed.
Additionally, the weighted average inflation figure used for the major tariff saw a four-fold increase. Together with exchange rate movements, it was said to have negatively affected the ability of the utilities to purchase critical inputs required for their operations.
The Commission used a projected inflation rate of 42.63% in its tariff analysis for the First Quarter of 2023.
“The combined effect of the Cedi/US Dollar exchange rate, inflation and WACOG is that the utility companies are significantly under-recovering and require an upward adjustment of their tariffs in order to keep the lights on and water flowing”, the statement added.
More to come!