On Wednesday 15th November, 2017 the 2018 National budget was presented to Parliament with proposal to Public Utilities Regulatory Commission (PURC) to approve on average a 13% electricity tariff reduction over a two year period. In the performance of its work, the PURC shall act independently without any interference, control nor direction by any individual or authority. PURC sets guidelines to charging tariffs and has been performing this function about two decades now.
The Commission is actually made up of a representative each from Trades Union Congress (TUC), Association of Ghana Industries (AGI) and Consumer Associations while four other members with technical experience with the work of PURC. The composition of the PURC means practically all the interests of all segments of Ghanaians are actually taken into consideration before determining tariffs. Therefore higher tariffs are just products of economic conditions and the strength of the variables use for the tariff determination.
Thus , announcing tariff reduction in the Budget may undermine the authority of PURC and play the PURC against public attack if the recommendation for the reduction is not approved. All regulatory institutions are required to perform their functions independently, professionally, proactively and with consumer protection as an overriding duty. There are many stakeholders in the work of PURC including government, producers of power and distributors the attempt by government to impose tariff reduction maybe offensive to power producers and distributors though may interest consumers. During and after the reading of the budget many Ghanaians have been asking questions to the effect that if government has such a power to impose reduction in tariffs then government can equally impose reduction in lending rate, fuels prices, water tariff, reductions in tertiary school fees among others. Some maybe asking why government with all this new power to reduce tariff irrespective of a regulator, did not recommend fuel prices reduction in the budget and expect National Petroleum Authority (NPA) to approve in the interest of Ghanaians?
Government responded to the concerns raised by citizens about the possible usurpation of the power of PURC by insisting that PURC cannot refuse the recommendation by government. The effects in 2018 may be underestimated but clearly government is sending a signal that may create governance problems. Citizens will now believe that after all government can do anything, it does not matter if indicators point to another direction. Citizens will believe that it is because government does not want to reduce fuel prices that are why two days after the budget reading fuel prices were increased. Citizens may also believe that it is because government does not want to reduce interest rates, because it has the power to propose reduction and Bank of Ghana will not refuse the proposal to reduce interest rate.
Workers may believe that Fair Wages and other Institutions in the determination and negotiation for wages and remuneration can be directed by government so may demand adjustments that must be fulfilled by government. Responses such as this to genuine concerns raised by citizens to deepen governance have serious negative effects because if government can succeed with the imposition of tariff reduction on PURC then it must be the same for all regulated prices and rates in Ghana. All of us will be happy if fuel prices, interest rates and tariffs are reduced drastically but we also believe regulatory institutions must be allowed to perform their functions. Perhaps allowing regulatory institutions to perform their functions independently, professionally and proactively when government concentrates on dealing with possible factors emanating from economic management may help PURC and other regulators determine prices , rates and tariffs to deliver sustainable benefits for all.