Tariff Hikes Threaten Manufacturing Growth – FABAG
By Maame Efua Kwaduah
The Food and Beverages Association of Ghana (FABAG) has called for comprehensive reforms in the country’s power sector, warning that persistent increases in electricity tariffs are hampering industrial growth and placing additional pressure on manufacturers already facing difficult operating conditions.
FABAG’s Executive Chairman, Rev. John Awuni, said Ghana’s response to challenges in the electricity sector has become overly reliant on tariff adjustments rather than addressing the inefficiencies affecting utility providers and consumers.
His remarks follow the latest tariff review by the Public Utilities Regulatory Commission (PURC), which announced a 3.49% increase in electricity tariffs for all categories of consumers and a 0.85% rise in water tariffs, effective July 1, 2026.
PURC attributed the adjustments to macroeconomic factors, including inflation, exchange rate fluctuations, fuel prices and changes in the electricity generation mix.
However, Rev. Awuni argued that repeated tariff hikes do not address the underlying operational and financial challenges confronting the sector.
“The persistent increases in electricity tariffs are a complete disincentive for industrial development,” he stated.
Industry stakeholders have consistently identified energy costs as a major obstacle to business expansion, particularly in the manufacturing and agro-processing sectors, where electricity accounts for a substantial portion of production expenses.
According to Rev. Awuni, rising utility charges are making it increasingly difficult for businesses to expand, remain competitive and create employment opportunities.
He maintained that while tariff reviews may offer temporary financial relief to utility companies, they do little to improve efficiency across the electricity value chain or resolve long-standing structural weaknesses.
“Continuous adjustments of electricity tariffs will never make the utility sector efficient, will never make the industrial sector develop, and will never bring illegal users of electricity into a legal space,” he said.
The FABAG Chairman further rejected suggestions that the sector’s difficulties are caused by low electricity prices, arguing that inefficiencies in management, revenue collection and power distribution remain the principal concerns.
He noted that Ghana already has some of the highest electricity costs in the sub-region and cautioned that additional increases could weaken the competitiveness of local industries and discourage investment.
Rev. Awuni urged policymakers to adopt innovative and sustainable reforms aimed at reducing losses, improving operational performance and addressing inefficiencies within the sector.
“We must begin to face the bull by the horns, and facing it by the horns is not the continual adjustment of electricity tariffs. That is a very lazy way of dealing with the inefficiency of the power sector,” he stressed.
He warned that continued increases in energy costs could weaken industrial output, slow investment and undermine the country’s industrialisation agenda, ultimately affecting economic growth, job creation and investor confidence.
