VRA says tariff increase was low

The Volta River Authority (VRA) on Thursday said the recent 103 per cent tariff increase approved by the Public Utilities Regulatory Committee (PURC) was "below expectation."

The new rate does not support the vision of growth of the Authority nor does it help its present unsustainable state.

Briefing participants at a workshop in Accra on the Transitional Plans for Electricity Rate Adjustment, Mr Eric Yankah, Deputy Chief Executive in charge of Finance and Administration, said the new tariff, when plugged into the operations of VRA, "would not make any impact and we will continue to have severe cash losses even in the next five years."

The VRA demanded a 400 per cent increase in tariffs but the PURC granted them 103 per cent.

Mr Yankah was commenting on the impact of the transitional plans on the operations of the VRA and its desire to provide regular power for the country.

The transitional plans, among other things, seek to ensure a gradual revision of electricity tariffs towards the projected economic and efficient rates by the end of 2003, when private sector participation in state-owned utility service provision was expected to commence.

Mr Yankah said delay in implementing realistic tariff adjustments was doing the authority a lot of harm, adding, "the delays indeed ...have driven VRA near bankruptcy".

He noted that the transitional plans do not state how to get money to balance the books on their operations and so they would constantly be running at a cash deficit.

"Government must find a way of handling the shortfall. The PURC must ensure that it sticks strictly to the plan once it is agreed on. It will be disastrous if the goal posts keep changing. It will not help."

Mr Charles Tetteh, Director of Finance, ECG, giving the impact of the plan on his company, said even though ECG could make some headway within the plan, "we cannot meet our debt service obligations for this year or the next.

"In 2003, we may have some money for debt servicing but we will be left with no other funds to operate with."

Mr Tetteh said because realistic tariffs are not charged and major consumers including government do not pay what they owe, the company would continue to make losses in the next five years if nothing was done to support it.

Besides, with the transitional plan there would be no profit. "This year we will lose 43.5 billion cedis, 28 billion cedis next year and 32.6 billion cedis in 2003."

Mr Tetteh, therefore, called on the PURC to find a means of ensuring a safety period for ECG in the transitional plan.

He said ECG was in consultation with government to try and arrange a moratorium on the 195 billion cedis owed by ECG.

In a brief remark, Mr Albert Kan-Dapaah, Minister of Energy, urged the participants and consumers alike to come out with what they want.

He said, "either we stay the way we are, with inefficient and unsatisfactory service at the same rates or decide today that we are prepared to close the debt gap by paying realistic tariffs that will make the utilities not only operational but efficient and committed".