The Trades Union Congress has rejected plans by the Public Utilities Regulatory Commission (PURC) to review the cost of electricity and water tariffs upward.
The labour organization has said in a letter to the PURC that the timing of the major tariff review is bad.
“Given the circumstances in which we find ourselves today, economically, socially and politically, we do not think that this is the time for a major tariff review,” said Dr Yaw Baah, Acting General Secretary of TUC.
The PURC has been conducting a nationwide public hearing and stakeholder consultations ahead of the tariff review that would be announced before the end of the year.
The public hearings and stakeholder consultations, according to Director of Public Relations and External Affairs at the PURC , Nana Yaa Jantuah, will afford “consumers and the general public to make inputs into and contribute to the proposals for a tariff adjustment that would be presented by the utility service providers.”
The TUC is among stakeholders the PURC has engaged as part of its nationwide consultations.
According to the TUC, although its engagement with the PURC has revealed challenges in the sector, tariff hikes in the power sector for instance would not solve the problems.
The TUC believes “the energy crisis is a symptom of a long term policy failure in the energy sector coupled with poor economic performance in recent times as well as technical and operational inefficiencies that have characterised the utility companies.”
Read the TUC’s letter to the PURC in full below.
We would like to express our appreciation for the forum PURC held for Organised Labour leaders on 16th October 2015 at Alisa Hotel. The forum provided a good platform for learning about the power situation in the country and for exchange of ideas.
We learnt, among many other things, that currently Ghana has installed power generation capacity of about 2,923 MW, a peak demand of about 2,140 MW and a deficit of about 600MW. It is this level of deficit which had compelled a load shedding of about 600 MW which has created the energy crisis.
Among other negative effects, the energy crisis has increased operational cost for businesses and thousands of workers have lost their jobs.
Among other negative effects, the energy crisis has increased operational cost for businesses and thousands of workers have lost their jobs.
We learnt further that the energy crisis is the result of the following:
-Excess demand over supply (an annual demand for power of about 10% which is far above the annual average of power for Africa of about 3%);
– Depreciation of the cedi against other major international currencies;
-Changes in the generation mix from the relatively cheaper hydro to dependence on thermal generation which is more expensive;
-High indebtedness of utility companies (VRA owes banks about $1.3 billion and the indebtedness of ECG is about $ 1 billion); and
-Government’s indebtedness to ECG and VRA.
We also believe that the energy crisis is a symptom of a long term policy failure in the energy sector coupled with poor economic performance in recent times as well as technical and operational inefficiencies that have characterised the utility companies.
Government has responded to the recent power crisis by signing Emergency Power Agreements to provide thermal power which will surely be very expensive for consumers.
We share the view that the influx of the expensive emergency power generators would not have been necessary if we had managed the existing installed capacity more efficiently. The emergency power producers are only coming to take advantage of the energy crisis.
Ghanaian consumers are already paying heavily for the poor macro-economic performance and the technical and operational inefficiencies of utility companies. We envisage that these expensive emergency power agreements will worsen the plight of Ghanaians because they are likely to drive tariffs beyond the pockets of ordinary Ghanaians.
We are aware that the majority of consumers expressed dissatisfaction with the quality of service provided by the utility companies in the nationwide public hearings and stakeholder consultations organised by PURC.
Consumers, including Organised Labour leaders and members, rejected the proposed tariff demands by the utility companies on the grounds that they lacked merit especially in this period of power crisis and limited access to potable water for millions of Ghanaians.
As representatives of workers, we are worried about the ever increasing utility tariffs which do not match the rate of increases in incomes.
We are also worried that Government is not initiating any policies or measures to manage the demand side of the energy sector. All the efforts seem to have concentrated on the supply side. There must be a balance between supply side and demand side measures in order to have a lasting solution to this debilitating power crisis.
On the basis of the aforementioned, our position on the 2015 major tariff review is that, PURC should first consider the availability and reliability of power before a review of tariffs.
It is only when the people of Ghana, including workers in both formal and informal sectors of the economy, are sure of a reliable supply of power and water that they can be convinced to pay higher tariffs. The utility companies must be compelled to reduce their technical and operational inefficiencies as the condition for tariff review.
As mentioned above, Ghanaian consumers are already paying heavily for the depreciation of the Ghana Cedi and the high inflation. Real wages have fallen drastically especially since 2012.
Given the circumstances in which we find ourselves today, economically, socially and politically, we do not think that this is the time for a major tariff review.
We are ready to engage the PURC on these and other issues raised by Organised Labour in the last forum.
We count on your understanding and cooperation.
Yours faithfully,
FOR: ORGANISED LABOUR
[SIGNED]
DR. YAW BAAH
ACTING SECRETARY GENERAL
TRADES UNION CONGRESS (GHANA)
By George Nyavor
