Ghana’s Public Utilities Regulatory Commission (PURC) will increase electricity tariffs by 3.49% from July 1, 2026. This decision comes despite a recorded drop in domestic inflation to 3.43% and a 1.58% reduction in natural gas costs.
IMANI Africa criticises this tariff adjustment. It argues the PURC used a 0.2% depreciation in the Ghana Cedi to justify the increase. The think tank views this as a way to hide a wider liquidity problem in the power sector. It warns that privatising the Electricity Company of Ghana (ECG) without solving deep-seated issues will harm consumers.
This tariff adjustment fits into Ghana’s broader economic policy. The government is working with the International Monetary Fund (IMF) to reform key sectors. Handing ECG over to private management by 2027 is part of this plan. However, IMANI Africa suggests that privatising a flawed system without addressing regulatory shortcomings will create more problems. It will encourage profit-seeking behaviour instead of real improvements.
IMANI Africa calls the tariff increase a 'fiscal arbitrage' tactic. The think tank states the PURC uses its power to force consumers to cover systemic problems. This information comes from a policy brief published by IMANI Africa. The brief is titled 'Epistemic Blindness and Fiscal Arbitrage: The Structural Perversity of Ghana’s Power Sector "Reform"'.
The current setup allows for a 21.5% technical and commercial loss benchmark in the tariff formula. This benchmark is much higher than the global standard of 5% to 8% for efficient utilities. If private management takes over in 2027 under this system, there will be no strong incentive to fix these losses. Private operators could simply benefit from this authorised leakage. They would pass operational losses to consumers while keeping profits.
In January, consumers paid a 9.86% tariff increase. This payment was for capital expenditure (CAPEX) to upgrade infrastructure. IMANI Africa points out a paradox: consumers pay for system upgrades, yet the tariff structure still includes high charges for losses. This means consumers are likely paying twice for the same issues. A private manager will focus on future profits, not historical state debt. Ghanaians will then pay high management fees and continue to fund ESLA pump taxes for old debts.
Power sector reforms must tackle these structural issues before privatisation. The government must provide the regulator with the tools to properly monitor utilities. This includes an independent telemetry network. This network would give the regulator real-time data. It would stop the regulator from relying on self-reported data from power companies. This reliance causes an 'epistemic blindness,' where the regulator lacks key information.
Political interference in revenue collection is also a major problem. Commercial losses often come from unpaid bills by state ministries and departments. A private concessionaire would need the freedom to disconnect defaulting state agencies. However, the current political system does not allow this. Introducing a private manager in 2027 without solving this political issue will only add an unnecessary cost layer. Decision-makers must ensure regulatory independence and strong enforcement mechanisms. Without these, the intended benefits of privatisation will not reach consumers.