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1.5% electricity tariff reduction will make debt restructuring impossible – IPPs

Dr. Elikplim Apetorgbor

The Independent Power Producers (IPPs) have described the recent 1.52 percent reduction announced by the Public Utilities Regulatory Commission (PURC) on electricity tariffs as unacceptable. The IPPs said the reduction would affect ECG’s debt restructuring efforts.

The President of the IPPs, Dr. Elikplim Apetorgbor said the ECG will struggle to pay its debt. He further indicated that “We are on life support and cannot guarantee continuity. If you give us a haircut, say a 30% or 40% reduction, who is going to pay our debts for us?”

“The debt in question is not our savings, it’s not our profit. So it is impossible to restructure it.” Meanwhile, PURC has defended its position on the downward review of utility tariffs, attributing it to a number of factors.

PURC highlighted inflation and a stable exchange rate as some of the factors that resulted in the 1.52 percent decrease in electricity tariffs effective December 1, 2023. The Director of Research and Corporate Affairs, Dr. Eric Obutey, said the production of more gas and hydro also pushed the tariff down.

“The downward review was necessitated by four factors: the generation mix, where we now use more hydro compared to thermal. Hydro now accounts for about 31.9%, and thermal is about 68%.”

“We have a downward trend in inflation, which has dipped by about 3.6%, and we also have fuel prices, which have gone down by about 5.9%. So if you put it all together, these factors necessitated the downward trend in electricity prices,” Dr. Eric Obutey explained.

In its 2023 fourth-quarter tariff review, the PURC announced a 0.34% increase in water tariffs and a 1.52% decrease in electricity tariffs to take effect on December 1, 2023.

The water tariff for residential customers increased from GHS/m³ 4.72 to 4.74, while non-residential customers moved from GHS/m³ 14.13 to 14.19. For water sachet producers, their tariff has been hiked from GHS/m³ 22.26 to 22.34; Industrial consumers will have their tariff moved from GHS/m³ 25.29 to 25.38.

Source: Citi Newsroom

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