225% power tariff hike will worsen economic hardship – Analyst

By Samuella Antwi

An economic analyst has warned that the proposed 225 perc ent increase in electricity distribution charges by the Electricity Company of Ghana (ECG) could deepen economic pressures on households and businesses if structural inefficiencies within the utility are not addressed.

Speaking on Business Breakfast on Zed this morning, Economic Analyst Emmanuel Boateng stressed that the Public Utilities Regulatory Commission (PURC) is unlikely to grant ECG’s full request due to the potential impact on the broader economy.

“The point I am making is that they are looking at what we can do to control the court so that we do not expose the people at the other end too much,” Boateng said. “PURC is unlikely to approve the entire 225 percent increase. They are not likely to do that. Irrespective of the data available to them, irrespective of the arguments presented, they are unlikely to approve it fully. They may allow some part of it to go through, but 225 percent is very high,” he lamented.

The economic analyst explained that PURC is expected to weigh the economic realities facing Ghanaians against ECG’s request.

“I am sure they are aware of the current living conditions in the country. They understand where the country is headed and will conduct an impact analysis to see how these increases will affect not just people’s income levels and the pressure on household budgets, but also the general economy,” he stated.

Mr Boateng cautioned that the proposed tariff hikes could fuel inflation from both the supply and demand sides of the economy.

“Almost everyone in this country uses electricity and therefore pays bills. For households and businesses alike, there will be an increase in electricity bills because tariffs translate directly into what you pay.

“I think it will impact inflation both from the supply side and the demand side. For producers, electricity is part of input costs; when input costs rise, these are passed on to consumers. So the cost on the supply side goes up and is passed on to the demand side,” he stressed.

Beyond inflation, the economic analyst warned that the move could harm the competitiveness of Ghanaian products against imports.

“It could also affect competitiveness. Ghanaian products are already struggling against cheaper imports. Imported goods cost less than Ghanaian products. This tariff increase adds another layer of cost on local products,” Mr Boateng indicated.

He criticised the structural challenges that have plagued ECG for years.

The economic analyst emphasised: “Let us not use state-owned enterprises to justify political considerations. ECG’s leadership changes with every new government administration. Why should that be?”

The economic analyst added that inefficiencies such as illegal power connections, poor revenue collection and outdated infrastructure lie at the core of ECG’s financial struggles.