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Urban Water Tariff Ghana

Urban Water Tariff policy in Ghana. A look at the role of PURC as the referee between the providers of utility services and the consumers

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Bonzibit Zibit
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131 views15 pages

Urban Water Tariff Ghana

Urban Water Tariff policy in Ghana. A look at the role of PURC as the referee between the providers of utility services and the consumers

Uploaded by

Bonzibit Zibit
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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URBAN WATER TARIFF POLICY

ENVIRONMENTAL QUALITY ENGINEERING

INTRODUCTION
Issued by PURC in accordance with the PURC

Act, 1997 (Act 538) Applies to urban water rate setting in Ghana GWCL is in charge of urban water supply in Ghana Urban areas defined by GSS as communities with population more than 5000

OBJECTIVES
To ensure that rates provide an optimum

balance between the interests of the consumers and investors. Consumer interest: Low tariffs and improved service quality Investor interest: Profit maximization

POLICY STATEMENTS: Tariff structures


1. Jurisdiction -Policy applies to activities of GWCL only; secondary market providers exempted.

2. Uniformity of tariffs -GWCL tariffs should be uniform irrespective of differences in cost of supply

3. Rising block tariff structure. -Inefficient mechanism for delivery of affordable water supply services to the poor

POLICY STATEMENTS: Tariff structures


4. Lifeline tariffs -Set at levels to reflect affordability but not less than basic operational unit cost. 5. User categories and cross subsidies -Non-domestic tariffs should be higher than the domestic tariffs irrespective of supply cost. 6. Infrastructure development charges -Does not support the imposition of infrastructural development.

POLICY STATEMENTS: Tariff structures


7. Connection and reconnection fees -Connection fees set to recover full cost of connection from mains. -Reconnection fee set to recover reconnection cost plus penalty to act as deterrent. 8. Assisted access to the poor -promote/ support initiatives to help the poor

9.Levels of service -Same tariff structure for domestic customers irrespective of LOS and unit cost of supply.

POLICY STATEMENTS: Cost recovery


10. Short term cost recovery -tariffs shall be based upon cash flow requirements plus an increasing allowance for depreciation. 11. Medium to long-term cost recovery -shall include allowances to returns on total capital.

12. Direct operational unit costs -that of sold and paid for water expected to fall as efficiency improves.

POLICY STATEMENTS: Cost recovery


13. Capital investment including capital maintenance -shall be included in tariff calculations. 14. Working capital -GWCLs cash flow stream shall allow for any changes in working capital requirements. 15. Taxation -not considered within tariff determination as GWCL has no tax obligations.

POLICY STATEMENTS: Cost recovery


16. PURC costs - Currently not carried through to the tariff although PURC reserves the right to impose a regulatory charge sometime in the future. 17. Capital valuations and regulatory capital value Regulatory asset value shall be the net value of assets 18. Return on capital - Short term: what is required to finance interest payments

POLICY STATEMENTS: Cost recovery


-long term: shall be set on achievement of full cost recovery 19. Capital structure -considered to be a GWCL management issue -has no bearing on tariffs except when there are debt obligations to be satisfied.

POLICY STATEMENTS: Environment


20. Water use management -employment of tariffs as consumption reduction mechanism not supported -supports employment of awareness and education campaigns by operators 21. Leakage control -supports concept directed towards the achievement of economic level of leakage

POLICY STATEMENTS: Constraints and other factors


22. Cash flow -the cash flow position of GWCL shall be considered in tariff determination.

23. Affordability -affordability constraints is incorporated into tariff structure. -lifeline rate for domestic customers is principal mechanism for incorporation.

POLICY STATEMENTS: Constraints and other factors


24. Currency -tariffs shall be determined in GH POLICY STATEMENTS: Process 25. Tariff review periods -major tariff reviews to be undertaken every 5 years by PURC 26. Tariff review process -shall include the publication of draft tariff proposals, public consultation, the publication of final determinations, and an appropriate appeal procedure

POLICY STATEMENTS: Process


27. Interim reviews -quarterly interim reviews to be undertaken -inflation, exchange variations and any extraordinary changes in the operating environment must be taken into account.

CONCLUSION
It is a laudable policy

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