IPPG demands utilities prove efficiency gains before tariff hikes approved

The International Perspective for Policy & Governance (IPPG) has urged the Public Utilities Regulatory Commission (PURC) to reject proposed tariff increases of up to 224 percent unless utilities demonstrate measurable efficiency improvements, arguing that consumers should not bear the cost of operational failures.

The think tank said any tariff approvals should be tied to verifiable efficiency gains to ensure higher revenues translate into better service delivery.

IPPG Research Fellow, Seth Owusu-Mante, warned the increases risked passing inefficiencies onto consumers without tackling structural problems. “Electricity tariffs in Ghana have historically been heavily subsidized, creating structural imbalances in the sector. At the same time, inefficiencies including high technical and commercial losses and revenue leakages remain a challenge. Passing these inefficiencies onto consumers without clear reforms undermines public trust,” he said in a communique.

The intervention comes as the Electricity Company of Ghana, Ghana Grid Company and Volta River Authority seek increases of 224 percent, 130 percent and 59 percent respectively – among the steepest in Ghana’s history.

Despite PURC’s quarterly tariff adjustments that account for exchange rates, inflation and fuel costs, IPPG noted inefficiencies and service quality issues persist, requiring a regulatory approach that links tariff changes to measurable performance improvements rather than automatic cost pass-through mechanisms.

The utilities have justified their requests with rising costs. GRIDCo cited maintaining and expanding transmission infrastructure, ECG pointed to restoring financial viability under inflationary pressures, and VRA highlighted the need for cost recovery on generation.

IPPG acknowledged these concerns but said they underscored deeper structural issues that could not be solved simply by shifting costs to consumers. Its July 2025 report, Securing Ghana’s Energy Future: Policy Actions for Sustainability and Efficiency, identified systemic problems requiring comprehensive reform rather than piecemeal adjustments.

Under IPPG’s proposed framework, utilities would have to demonstrate improvements in operational metrics such as reductions in technical and commercial losses, improved system reliability, and stronger customer service before receiving tariff approvals. This, it said, would ensure higher electricity costs deliver tangible benefits rather than subsidising inefficiency.

The think tank also argued that consumers have already absorbed multiple recent increases, including a 14.75 percent rise for the second quarter of 2025, a further 2.45 percent for the third quarter, and a GH¢1 per litre fuel levy.

IPPG called on PURC to consult widely with stakeholders before deciding on the proposals, stressing that such significant adjustments require full economic and social impact assessments. It further recommended implementing increases incrementally to allow households and businesses time to adjust.

Additional measures should include stronger consumer protection for lifeline and low-income households and transparent communication about the reasons for tariff adjustments and safeguards being implemented. “Reliable electricity supply is critical for Ghana’s development, but sustainability cannot come at the expense of fairness,” Owusu-Mante said. “Ghanaians deserve an electricity sector that not only recovers its costs but also delivers reliable, efficient and affordable service,” he added.