In an unusual situation, the Ghana National Chamber of Commerce and Industry (GNCCI) has downplayed fears of a potential impact of the recently announced increase in electricity tariffs on prices of goods and services.
Their seeming support for the tariff hike follows criticism from some Civil Society Organizations against the Public Utilities Regulatory Commission (PURC) for the 2.45 percent tariff hike effective July 1, 2025, citing a lack of transparency, inadequate stakeholder engagement, and a disregard for economic indicators that should have warranted a reduction.
The adjustment follows the Commission’s routine quarterly review. Meanwhile, water tariffs will remain unchanged for the third quarter of the year.
In a joint statement issued last week, CUTS International Accra and the Centre for Environmental Management and Sustainable Energy (CEMSE) accused PURC of violating Section 3(c) of Act 538 of 1997, which mandates fair utility pricing for the mutual benefit of the government, producers, and end-users.
However, the GNCCI CEO downplayed the potential impact of the increment, describing it as minimal.
“What we are looking at is that if there is a further improvement in the key variables, we expect the tariffs for businesses to eventually be reduced,” Mark Badu-Aboagye said in an interview last week.
He added: “Electricity costs per kilowatt hour in Ghana are already quite high, so an additional 2.45% increase will certainly raise production costs. However, I don’t believe this will result in a significant rise in prices.”
Meanwhile, the CSOs argue that the proposed tariff increase is unjustified given recent improvements in Ghana’s macroeconomic conditions.
The civil society groups cited the appreciation of the Ghanaian cedi against the US dollar and declining inflation rates both key variables in the tariff-setting formula.
In a statement signed by the West African Regional Director of CUTS International, Appiah Kusi Adomako and the Executive Director for CEMSE, Benjamin Nsiah criticized PURC for failing to align its tariff review with current economic realities. They insist that consumers had expected a downward revision, not an increase.
They pointed to the over 30% appreciation of the Ghanaian Cedi between the first and second quarters of 2025 from GH¢15.70 to GH¢10.31 per US dollar which they say generated a GH¢1 billion windfall for government and utility providers.
This surplus, they argued, could have been used to clear arrears or reduce consumer costs, rendering the tariff hike unjustifiable.
The CSOs also criticized the PURC for relying on an outdated inflation rate of 20.67%, rather than the current 18.4%, noting that falling inflation lowers operational costs and should benefit consumers.
Additionally, they described the increase in the Weighted Average Cost of Gas (WACOG) by only $0.08 (1%) as too insignificant to warrant a tariff hike. They cited a previous instance in 2024 when a 25% rise in gas costs led to only a 3.5% increase in tariffs, making the current adjustment appear economically indefensible.
The statement further questioned the PURC’s justification of GH¢488 million in arrears, pointing out the Commission’s failure to explain how the cedi appreciation windfall was utilized.
They also accused PURC of excluding stakeholders from the decision-making process, particularly in introducing fuel costs and reserve margins into the tariff without public disclosure or consultation. The CSOs noted the lack of transparency regarding the 27% fuel cost component, for which no data, simulations, or procurement details were shared.
Warning of long-term consequences, the CSOs said continued upward tariff adjustments could entrench inefficiencies in Ghana’s power sector and unjustly burden consumers.
“If care is not taken, PURC’s frequent upward tariff adjustments could succeed in the creation of an energy sector that is not efficient,” the statement read.
They called on the President of Ghana to immediately halt the 2.45% tariff increase and demanded full disclosure of the tariff adjustment methodology and the assumptions that informed the Commission’s decision.
