Pricing and tariff design in the Ghana Water Supply Sector: a case study of the Ashanti Region of Ghana

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Ghana Water Company Limited (GWCL) recognizes both the social and economic importance of supplying water to all consumers. The company has not been able to achieve 100% coverage in urban areas. One of the problems leading to this underachievement is financial. Lack of adequate financing on the part of water service providers usually lead to poor maintenance and expansion of services The Public Utilities Regulatory Commission (PURC) in 2002 introduced tariffs to promote fairness in the water pricing or households The lifeline block, which was at an initial volume of 10m was consequently raised to 20m’ This work seeks to investigate the effect of tariffs and tariff structure on consumers in terms of fairness and equity and to find its financial implication on GWCL The tariff structure of GWCL has always been an increasing block tariff (IBT) It is intended to favour the urban poor with an initial lifeline block, which is billed at a lower rate. Unfortunately most of these low-income consumers live in tenement houses with a single meter. The result is that consumers in such houses often move into the higher more expensive block In carrying out the study, a survey was conducted that classified the housing stock in Kumasi into three namely, type I representing houses containing 10 households or more Type II representing houses containing 2 to 10 households, and type III representing single household residence. Three locations from each housing classification type were selected and houses sampled from each location. Water consumption and revenue records from January 2002 to December 2002 were obtained from the commercial department of GWCL. The selected houses were visited for data on population. One small town under community water and another community under private operation were also studied Analysis were performed to find out the impact of the 2002 GWCL tariff structure on the financial performance of the company, and also to find the effect of tariff and tariff structure on consumers c terms of fairness and equity. The result of the study showed that consumers in type and H houses pay 20.5% and 84% respectively more for water per m3 than consumers in single residence houses 1 was also realized that all consumers enjoy subsidies with consumers in type III paying 61% of the true cost o water while consumers in type II pay 71% of the true cost of water Consumers in type I pay 85% of the true cost of water The study further revealed that the minimum household water requirement was 52 I/c/d for type Based on a per capita consumption of 60 I/c/d and a household size of 4, a lifeline block of I 0rn will be reasonable It was also realized that at this lifeline block. GWCL could increase revenue generation by 5.5%
A thesis submitted to the Board of Postgradute Studies, Kwame Nkrumah University of Science and Technology in partial fulfilment of the requirements for the award of Master of Science, 2003