Less than four months after President John Dramani Mahama pledged to reduce electricity costs as part of his proposed 24-hour economy policy, Ghanaians have been confronted with yet another hike in utility tariffs.
The Public Utilities Regulatory Commission (PURC) announced on Friday that electricity tariffs will go up by 14.75% and water tariffs by 4.02%, effective May 3, 2025.
The increase, which falls within PURC’s quarterly review mechanism, raises questions about the timing of the increment following John Mahama’s earlier promise to offer cheaper and more reliable electricity to businesses subscribing to his 24-hour economy initiative.
Background
In his New Year address on January 3, 2024, Mr. Mahama introduced a central pillar of his campaign platform — a 24-hour economy aimed at revitalising Ghana’s sluggish economic performance.
The initiative, according to Mahama, would improve productivity, drive exports, and generate employment, particularly through enhanced industrial activity and service delivery during off-peak hours.
Mahama promised tax reliefs and a tiered, time-of-use electricity pricing system, under which businesses operating during off-peak hours would enjoy lower power tariffs.
He also mentioned the rollout of smart meters to facilitate this system, framing it as a “game-changer” comparable to similar models in countries like South Korea and the United States.
PURC’s Explanation
The PURC, in a statement signed by its Executive Secretary, Dr. Shafic Suleman, attributed the latest hike to key economic variables including inflation, exchange rate depreciation, changes in the electricity generation mix, and gas pricing.
According to the Commission, a Weighted Average Exchange Rate of GHS15.6974 to the dollar and a projected inflation rate of 22.49% were used in setting the new tariffs.
The Weighted Average Cost of Gas dropped slightly from USD7.83/MMBtu to USD7.63/MMBtu, while hydropower constituted 28.80% of generation compared to 71.20% thermal, placing upward pressure on tariffs.
In addition, the PURC disclosed that an outstanding revenue debt of GHS976 million from the previous year also influenced the decision.
Only half of this amount is being recovered in the current quarter to reduce the impact on consumers, with the rest spread over the year.
The tariff hike is likely to fuel public skepticism about the practical implementation of John Mahama’s energy cost reduction promises, especially with election campaigning set to intensify later in the year.
While PURC maintains that its quarterly review mechanism prevents both under- and over-recovery by utility providers, critics argue that the recurring hikes undermine broader economic recovery goals.
Furthermore, the disconnect between policy proposals and prevailing utility pricing realities has opened up new grounds for debate.
