The Electricity Company of Ghana (ECG) claims that if its plan for a 148 percent tariff increase is accepted, it will cut its debt to sales ratio by 20%.
Once its planned price hike is authorized, the major power distributor intends to raise other income by 10% and ensure a 95% completion rate on all projects.
On Wednesday, ECG’s General Manager for Regulatory Management, Sylvia Noshie, spoke at a stakeholders’ consultative meeting for the multi-year major tariffs review organized by the Public Utilities Regulatory Commission (PURC) and presented some reasoning for ECG’s desire for the price increase.
“If the Commission adopts our tariff, we have a strategy in place, and we understand that a lot is expected of us.” Our goal is to get our debt-to-sales ratio down to 20%. “We hope to meet the PURC’s 98 percent collection target, and in terms of operational excellence, we will ensure that at least 95 percent of projects are completed on time,” she said.
ECG has come under fire after proposing a 148 percent increase in tariffs for the years 2019 to 2022.
However, during today’s stakeholders’ meeting, the company maintained that the increased tariff would help it minimize losses and become more efficient.
“We want to improve and be more efficient when it comes to losses, therefore we’ll be aiming to fulfill the regulator’s five-year targets.” Our current aim is 22.6 percent,” she explained.
The corporation also stated that if the proposed 148 percent tariff increase is authorized, there will be no tariff increases greater than 10% year over year.
Meanwhile, the Institute of Energy Security (IES) has dismissed ECG’s demand for a rate increase as unfeasible.
Even though the think tank acknowledges that production costs have risen over time, it maintains that the increase demanded is excessive.
Fritz Moses, an energy analyst with the IES, said that, the institute will meet with utility companies and the PURC to present their counter-proposals.
“For the increase that the Ghana Electricity Company is seeking, we believe it is excessive, and we recognize that the economy of 2018 and 2019 is not the same as that of 2022.”
“Things have inevitably increased, but the rate of increase, based on the 148 percent and 334 percent these businesses are requesting, is on the high side, and we believe they are unrealistic.”
“However, as these are proposals from their end, we will give our opinions on what we believe should be addressed in the final review when we meet with the PURC.”