PURC to review utility tariffs as oil inches closer to $40

The price of crude oil has started growing up on the international market after months of record decline, a situation that signals a likely upward review of utility tariffs.

Over the past two weeks the price of the commodity has gone up by some 25%. The price of crude oil on Tuesday, March 9 was trading at 39 dollars 84 cents a barrel.



The price pick up in crude oil – which was trading around 29 dollars a barrel some three weeks ago – signals an end to the challenges facing the commodity.

But users will not only have to think about the impact of this new trend on prices of petroleum products as the development is sure to affect utility tariffs.

So while some may celebrate the development, crude exporting countries such as Ghana would have something else to worry about.

If this trend of crude prices pick up continues then it could impact negatively on the cost of production f

The Public Utilities Regulatory Commission (PURC), the body that approves utility tariffs in Ghana, often looks at inflation, the cedi’s strength compared to international trading currencies, the cost of power generation – which includes the price of crude or gas.

The PURC last year approved almost 60% increase in electricity tariff and 67.2 percent for water, a move that was met with fierce criticism by consumers.

However, a former commissioner of the PURC has downplayed the impact of rising crude oil utility tariff adjustment.

Mohamed Amin Adam notes that the pick-up in crude prices might not be a significant justification to review utility tariffs.

He said an upward review of tariffs would rather depend significantly on the local currency's stability.

The PURC is expected to review tariffs by the end of this month as part of its quarterly adjustment routine.
or power producing firms in Ghana. The development could force the power producers to turn crude instead of gas, a situation that could see these companies push for another tariff adjustment.