Paying less for utility tariffs demands prudent consumption patterns

Solace AmankwaBy Solace Amankwa

A tariff is essentially a tax. It raises the price of an imported good, making it more expensive than similar domestic goods. The idea is to increase demand for domestic products while reducing the volume of imports. Tariffs also serve as sources of revenue for the country’s developmental agenda.


The Public Utilities Regulatory Commission in December last year increased electricity and water tariffs by 59.2 per cent and 67.2 per cent, respectively. The producers and distributors of electricity had argued strongly that they needed higher rates to recover cost, especially as production of electricity now was mainly through thermal sources —gas and fuel — which are far more expensive than the hydro.

Producers and distributors of electricity explain that resort to thermal sources became necessary as the levels of water in the three main dams, which have an installed capacity of about 1,600 megawatts, are critically low due to poor rains.

The fact remains that there has been an expansion in rural electrification within the past years, putting pressure on the already high demand, resulting in a load shedding exercise since 2012. There is no doubt that Ghanaians now have some relief as production of electricity is about matching demand and many areas have not gone off since Christmas last year.

It must be noted, however, that a huge chunk of production is being done by Independent Power Producers (IPPs) who have signed agreements for rates that have to be paid by government.

On water, the state-owned Ghana Water Company also says higher rates are required to recover cost; else production will be negatively affected.

On the other hand, business owners, especially sachet water producers who use light and water as a source of production, have found the increments unbearable and have decided to pass on the cost of production to consumers by increasing the price of the commodity from 20 pesewas to 30 pesewas per sachet.

Without doubt, the utility fare increases have implications for the cost of living of the ordinary Ghanaian who is surviving on the daily minimum wage of 8 Ghana cedis, and opposition political parties are cashing in on the situation to their advantage as they condemn the increases as "killer" increases or tariffs.
While Ghanaians complain about the high tariffs, it is equally important that we will also conserve energy by adopting consumption patterns that prevent unnecessary waste in order not to return to the days of load shedding.

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