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The International Monetary Fund (IMF) has clarified that recent increases in electricity and water tariffs in Ghana are crucial for addressing long-standing inefficiencies in the country’s energy sector.
Tariff adjustments to curb sector shortfalls
According to the IMF, the tariff increments are designed to minimise the persistent revenue shortfall plaguing Ghana’s energy sector and to halt the accumulation of further financial arrears. In a statement published on its official website, the Fund stated:
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The resumption of quarterly electricity tariff adjustments, combined with structural reforms, will help reduce the energy sector shortfall and stop the accumulation of new arrears.
PURC announces 14.75% increase in electricity tariffs
This clarification from the IMF follows an announcement by the Public Utilities Regulatory Commission (PURC), which revealed an average increase of 14.75% in end-user electricity tariffs and a 4.02% hike in water tariffs for all consumer categories. The new rates are set to take effect from 3 May 2025.
The PURC emphasised that these adjustments are part of its quarterly review process, as stipulated in its rate-setting guidelines for electricity, water, and natural gas pricing. The review mechanism takes into account a range of economic indicators to ensure tariff levels reflect the real cost of utility provision.
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The Commission identified several contributing factors behind the upward revision, including fluctuations in the exchange rate, inflation, changes in the electricity generation mix, and the rising cost of fuel—particularly natural gas—used in power generation.
PURC explained that the objective of the review is to maintain a balance in revenue collection, avoiding situations of over-recovery or under-recovery, which could distort utility pricing and sustainability.
In a similar adjustment last July, the PURC raised electricity tariffs by 4.22% and water tariffs by 1.18%. These periodic reviews are part of ongoing efforts to stabilise Ghana’s utility sector and ensure consistent service delivery amid macroeconomic challenges.