IPP Chamber kicks against cost recovery tariff demand by ECG

ipp chamber kicks against cost recovery tariff demand by ecg

The Chamber of Independent Power Producers, Distributors and Bulk Consumers is kicking against the cost recovery tariff that the Electricity Company of Ghana (ECG) is demanding.

ECG is asking for 148% increment in electricity tariff, covering the period 2019 and 2022, which includes the cost recovery tariff.

But speaking to Joy Business, Chief Executive of the Chamber, Elipkplim Komla Apetorgbor, said ECG has been inefficient in its revenue collection.

“I disagree with their cost recovery tariff proposal. In tariff setting, there are two basic objectives or requirements we have to make”.

“We first look at a requirement with cost recovery that is prices the tariff should recover the total cost of production after any subsidies. Then, we have what we call cost reflective tariff; under the reflectiveness, we are talking about prizes equaling the marginal cost of production”, he pointed out.

Again, to Mr. Apetorgbor, the cost recovery objective is not equal to cost reflective objective.

“So to allow ECG or PURC give a cost recovery tariff, we imply that consumers will be paying for consumers’ inefficiencies”, Mr. Apetorgbor explained.

ECG proposes 148% increase in electricity tariff covering 2019 and 2022

The ECG in a proposal to the PURC is demanding a 148% increase in tariff.

The proposal wants the adjustment to cover the period 2019 and 2022. 

The ECG has subsequently proposed an average increase of 7.6% in tariff over the next four years to cover Distribution Service Charges (DSC).

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