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A Private Consultant in Energy and Infrastructure Finance, Mr. Patrick Nyarko has weighed in on the recent 14.75% and 4.02% tariff increase for electricity and water, respectively, labeling it as customer unfriendly.
In a telephone interview on GBC Radio Central’s Morning Show, Tuesday, April 15, 2025, he argued that increments in tariff ought to reflect customers’ ability to pay as well and be commensurate with the quality of services received from utilities providers like ECG and Ghana Water. Nonetheless, the regulator serves as an intermediary between the investors in the ECG/Ghana Water and the customers. This, according to him, is to ensure investors don’t lose their investment while customers too aren’t overburdened and given quality services.
Again, he noted the most important component in tariff regulation is also the protection of public policy or interest, which is an unwritten norm. To this, he argued that a tariff increase should not be a problem if customers can pay and service delivery is up to standard. But, “the problem is when tariff increase becomes a political football; this is what you get. Based on analysis, the NPP government has been better managers of tariff compared to the NDC,” he stressed.
Expatiating on his point, the private consultant in energy and infrastructure finance intimated that the NDC attempts to politicize tariff increment while in the opposition has come to bite them strongly. He highlighted that the public uproar that greeted the increase by the NDC government was highly expected, especially in the first quarter of 2025.
Touching on the variables in determining tariff increase, Nyarko outlined four variables – thus, exchange rate, fuel cost, inflation, energy mix, and the unseen under-recovery myth. He explained under-recovery to mean a situation where the cost of something (like fuel, overhead, etc) is not fully covered by the price it is sold for or the resources allocated to it.
He emphasized that tariff increment helps investors recoup their investment. But, was quick to add, what percentage of the under-recovery was left behind by the regulator in their last review necessitating the current tariff adjustment? “PURC ought to have made it known to the public the real value of the under-recovery left in absolute figures either in Ghana Cedis or USD, and this would have informed Ghanaians about the expected percentage upward adjustment in the next 3 months,” he affirmed.
Nyarko dismissed the notion that PURC is an independent body and therefore government has no hands in the tariff adjustment. He maintains that the independence of the PURC isn’t sovereignty, and therefore, current government can not detach itself from the PURC’s tariff decisions,” he posited.
Further, he shared the independence of the regulator deals with their technical analysis or professionalism, which cannot be interfered with, but when it comes to decision-making, “the policymakers like the current government have a bigger say in arriving at the set prices,” he stated, cautioning all others not to deceive the populace by trying to absolve the government from the tariff increment.
In justifying why the government cannot be absolved from blame with tariff adjustment, the consultant argued that in some extreme situations, the government can decide to abolish tariff upward adjustment and pay subsidies. This typifies how influential governments are in determining tariffs. “It would be a bogus argument to suggest that the government cannot be blamed for tariff upward adjustment. He averred that current PURC Board doesn’t have a consumer representation, and therefore, consumers’ interests were intentionally ignored. Independence isn’t sovereignty,” he ended.
