Ghanaian businesses are grappling with electricity costs that now constitute up to 40% of their production expenses. The Association of Ghana Industries (AGI) warns this burden severely impacts industrial competitiveness and investment.
This concern intensified following the Public Utilities Regulatory Commission (PURC) increasing electricity tariffs by 3.49%, effective July 1, 2026. Water tariffs also saw a 0.85% adjustment. PURC attributed these changes to movements in the exchange rate, inflation, generation mix, and fuel costs.
The rising utility charges pose a significant challenge to Ghana's economic growth and industrialisation efforts. High power costs directly affect manufacturing margins, potentially discouraging new investments. This situation also complicates the government's push for a 24-hour economy, which relies on businesses operating extended hours and consuming more electricity.
Eric Defoe, Chairman of AGI’s Economic Affairs Committee, highlighted the compounding effect of tariff adjustments. He stated, “It would appear so nominally, but the effect may not be 3.5% on pricing; it may go higher.” AGI estimates the latest adjustment could push some production costs up by as much as 10%.
The AGI argues that the impact of electricity adjustments multiplies through production chains. Suppliers, transport operators, and packaging businesses also face higher costs, which are then passed on to manufacturers. This creates a ripple effect across the entire economy.
For export-oriented companies, elevated electricity costs erode their competitive edge against international rivals. Manufacturers paying more for power than competitors must either accept lower margins or increase prices. This can divert investment to countries with more favourable operating conditions.
Tsonam Cleanse Akpeloo, Dean of AGI’s Greater Accra Regional Branch, previously noted the contradiction with the 24-hour economy initiative. He explained, “Increasing electricity tariffs sends the wrong signal” when encouraging round-the-clock production. Electricity is a critical input for businesses operating at night.
AGI's primary objection is not merely about utility companies needing more revenue. The association contends that efficiency improvements, not just cost transfers, should address the sector's financial challenges. They point to technical, commercial, and distribution losses within the electricity system.
Mr. Akpeloo stated in June, “Our view is that the utility companies should rather be focusing on tackling the losses.” Businesses should not continually absorb the financial consequences of operational inefficiencies. This argument underscores a fundamental debate about Ghana's electricity-sector economics.
While utilities require tariffs to cover costs and maintain infrastructure, significant system losses undermine this goal. Tariff increases can become a substitute for essential efficiency improvements. PURC maintains its tariff reviews follow an established methodology and pressures utilities to reduce losses.
The ongoing dialogue between industry and regulators highlights the delicate balance between utility viability and industrial growth. Sustainable solutions must address both the cost recovery needs of power providers and the competitiveness of Ghanaian businesses. This will ensure Ghana's economic development remains on track.