The latest utility tariff increase has renewed debate over the sustainability of pricing reforms in the power sector, with energy policy experts arguing that repeated adjustments are failing to address deep-seated inefficiencies in the system.<\/p>\n\n\n\n
The Public Utilities Regulatory Commission (PURC) has approved a 3.49 percent increase in electricity tariffs and a 0.85 percent rise in water rates effective July 1, citing movements in key macroeconomic indicators including exchange rates, inflation, gas prices and the country\u2019s hydro-thermal generation mix.<\/p>\n\n\n\n
Inflation eased to 3.43 percent for the review period from 4.17 percent in the previous quarter, while natural gas prices declined by 1.58 percent and the cedi remained broadly stable, according to PURC data.<\/p>\n\n\n\n
The regulator, however, said the combined effect of these variables still necessitated upward tariff adjustments to preserve the real value of revenues and sustain service delivery.<\/p>\n\n\n\n
But experts say the adjustments reflect a deeper structural problem that tariff reviews alone cannot resolve.<\/p>\n\n\n\n
The Policy Lead for Climate Change and Energy Transition at the Africa Centre for Energy Policy (ACEP), Dr. Charles Gyamfi, said the automatic tariff adjustment mechanism is designed to respond to macroeconomic shifts but does not address operational inefficiencies in the sector.<\/p>\n\n\n\n
\u201cThese adjustments deal with exchange rates, inflation, gas costs and the power mix. Those are known variables,\u201d he said. \u201cBut they will not solve the power sector challenges if we are not deliberate in retooling the sector.\u201d<\/p>\n\n\n\n
He said persistent transmission and distribution losses, alongside inefficiencies across generation and billing, continue to undermine revenue recovery despite periodic tariff increases.<\/p>\n\n\n\n
\u201cAutomatic adjustment does not deal with recurring losses in transmission and distribution or inefficiencies along the value chain,\u201d he said.<\/p>\n\n\n\n
\u201cWe can increase tariffs significantly and still not solve the problem. Even past increases have not translated into expected revenue performance.\u201d<\/p>\n\n\n\n
Dr. Gyamfi, therefore, called for targeted reforms to reduce system losses, improve collection efficiency and address the sector\u2019s growing debt burden.<\/p>\n\n\n\n
\u201cBeyond tariffs, we need deliberate action to cut inefficiencies and deal with debt in the sector. Otherwise, the conversation will remain stuck on cost-reflectivity without fixing the underlying issues,\u201d he said.<\/p>\n\n\n\n
Raising similar concerns, the Executive Director of the Centre for Environmental Management and Sustainable Energy (CEMSE), Benjamin Nsiah, said the latest tariff adjustments appear to prioritise the financial position of utility providers over consumer relief.<\/p>\n\n\n\n
He argued that prevailing economic indicators would ordinarily have supported a reduction in tariffs, but PURC opted for an increase due to liquidity constraints in the power sector and a need to mobilise revenue for debt servicing.<\/p>\n\n\n\n
\u201cFrom a fairness perspective, the indicators were largely in favour of consumers. One would have expected a tariff reduction,\u201d Mr. Nsiah said.<\/p>\n\n\n\n
But he reckoned that given the distressed financial position of utility providers, PURC appears to have prioritised revenue mobilisation over consumer relief.<\/p>\n\n\n\n
Mr. Nsiah warned that higher tariffs could also undermine revenue performance, as affordability challenges may push up system losses through non-payment and evasion. He said the core challenge remains high cost of power generation, driven largely by reliance on thermal energy and volatile fuel prices.<\/p>\n\n\n\n
\u201cPower generation in Ghana remains expensive because of our dependence on thermal sources and fluctuating fuel costs,\u201d he said. \u201cIf generation costs are not addressed, tariffs will remain high, and system losses will persist.\u201d<\/p>\n\n\n\n
Mr. Nsiah called for renewed negotiations with independent power producers (IPPs), arguing that legacy contracts continue to inflate generation costs and ultimately end-user tariffs.<\/p>\n\n\n\n
\u201cFurther renegotiation of some IPP agreements is necessary to reduce generation costs. If we bring down costs at the source, tariffs will ease, and more consumers will be able to pay,\u201d he added.<\/p>\n\n\n\n
Similarly, the Executive Director of the Africa Sustainable Energy Centre (ASEC), Justice Ohene-Akoto, rejected the latest tariff increase outright, insisting that consumers should not be asked to absorb the cost of inefficiencies that remain embedded within the power sector.<\/p>\n\n\n\n
He argued that tariff increases should come only after measurable reforms, including improvements in revenue collection by the Electricity Company of Ghana (ECG), greater transparency in the use of energy-sector levies, wider deployment of smart meters, reductions in technical and commercial losses and enhanced reliability of power supply.<\/p>\n\n\n\n
\u201cBefore talking about tariff increases, we need to see evidence of reforms\u2026The ordinary Ghanaian cannot continue to serve as the shock absorber for inefficiencies within the power sector,\u201d Ohene-Akoto stated.<\/p>\n\n\n\n
He also questioned the use of funds raised through the Energy Sector Levies Act (ESLA) and the recently introduced fuel levy, calling for greater transparency and accountability in how those resources are deployed to address the sector\u2019s financial challenges.<\/p>\n\n\n\n
According to him, consumers are yet to see corresponding improvements in service quality, operational efficiency and infrastructure despite years of tariff increases and sector levies.<\/p>\n\n\n\n