The Ghana Water Company Limited (GWCL) has defended its proposal for a tariff adjustment, pointing to rising operational costs, new loan repayment obligations, and the impact of galamsey pollution on water treatment.
Speaking on Joy FM’s Super Morning Show which discussed the tariff proposals of the Electricity Company of Ghana (ECG) and GWCL, Michael Klutse from the GWCL explained that the company has three main reasons for seeking approval from the Public Utilities Regulatory Commission (PURC).
“There were three reasons why we came to PURC for tariff adjustments,” he said. “The first reason is the PURC’s own tariff that they’ve given us in 2022, which they have done quarterly adjustments for since then, but it is still not able to cover the cost.
“At the time they did it, we were able to cover the cost. But for now, it is not helping us because the average tariff as we knew it at that time was equivalent to about 97 cents. Today it has dropped to about 82 cents. So on average there is that gap already between what they have given us before, and what we are getting now from the same average tariff.”
Mr Klutse identified loan repayments as the second reason behind GWCL’s application. He explained that projects initially financed by government loans and grants are now being transferred to the company for repayment.
“Most of the projects that we have taken loans and grants for have now been sent to us as Ghana Water to pay. So, Ministry of Finance is asking that those loans which they used to pay, which we never put on our tariff, Ghana Water Company should pay those loans now.
“They took loan to construct treatment plants and lay pipelines for Ghana Water to operate with. Hitherto, when that happens, Ghana Water doesn’t pay the capital cost. We don’t pay the loans to the Ministry of Finance. They pay to whoever the money is taken from. If it’s a loan, they pay to that very financier on our behalf. And so these costs were never part of our tariff build-up. But now they are asking us to pay. So we need to pass it through the tariff.”
He disclosed that the company is now required to pay nearly half a billion cedis annually.
“On average at the moment we are supposed to be paying about GH₵488 million a year. The loans are in different currencies, euros, dollars, and others, but when you put all of them together, the average payment plan that we have now is about GH₵488 million a year to the Ministry of Finance to refund these loans.
“This amount is about a fifth of Ghana Water’s total revenue requirement. We were given GH₵2.4 million by PURC as our revenue requirement for a year. So if you take GH₵488 million out of that, that’s about a fifth of that money going just to service the loan. That is just impractical; nobody can do business to start a thing without asking for more from the customers.”
Mr Klutse pointed to pollution of water bodies, particularly by illegal mining, as the third factor driving costs higher.
“Then we have the almighty pollution of water by galamseyers. And of course there are other pollutions, but the one that is really raising its head is galamsey activities. That is really causing us problems. As we speak, one of our plants is shut down because of that. We have other plants which are on the verge of shutting down.”
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