Bloomberg News

Ghana Raises Utility Prices as Power-Generation Costs Climb

August 30, 2011

(Updates with comment from Sarpong in third paragraph.)

Aug. 29 (Bloomberg) -- Ghana raised tariffs for water and electricity as higher crude prices and reduced supplies of natural gas from Nigeria pushed up productions costs, according to the Public Utilities Regulatory Commission.

The price for water was increased by 6.7 percent and for electricity by 7 percent for customers who use more than 50 kilowatt hours a month, Samuel Sarpong, commissioner of the Accra-based PURC, told reporters today. The changes take effect Sept. 1.

The increases could affect Ghana’s producer-price inflation rate as companies seek to remain competitive by absorbing the costs, instead of raising prices, said Sampson Akligoh, an economist with Databank Financial Services Ltd., in Accra.

“It will be seen in reduced profits for some” companies he said by phone today. Factory-gate prices accelerated 14 percent in July, the first rate increase since April, as manufacturing and mining costs climbed.

Ghana wants Nigeria to provide a more reliable rate of natural gas through a regional pipeline, said Stephen Adu, executive secretary of the PURC.

“If Nigeria will consistently supply the 123 million standard cubic feet of natural gas per day as promised, tariffs could be reduced by the next review,” he said in an interview. About 40 percent of Ghana’s power comes from thermal generation plants, which are fueled by light crude and natural gas.

Higher electricity prices also raise the treatment and operating costs of Ghana’s water utility, said Sarpong. The next review with be held Nov. 30, he said.

--Editors: Emily Bowers, Gordon Bell.

To contact reporter on this story: Ekow Dontoh in Accra at edontoh@bloomberg.net.

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net.


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