Ghanaian consumers will have to pay more for electricity as the Public Utilities Regulatory Commission (PURC) has announced an 18.36% increase in the average end-user tariff for the second quarter of 2023.
This comes after a 29.63% hike in the first quarter of the same year.
The PURC said the tariff adjustment was necessitated by the net effect of further currency depreciation, inflation, and an increase in the cost of gas.
The Ghanaian cedi has lost more than 20% of its value against the US dollar since the beginning of 2023, while inflation has risen to over 15%.
The tariff increase is also part of the conditions for Ghana to receive financial support from the International Monetary Fund (IMF), which is expected to approve a first loan tranche of a $3 billion package on Wednesday.
The IMF program aims to help Ghana restore fiscal stability and debt sustainability, as well as boost economic growth.
The PURC said it was aware of the impact of the tariff hike on consumers and businesses, but added that it was necessary to ensure reliable and quality electricity supply. It said utility companies were under-covering and required an upward adjustment of their rates in order to keep the lights on.
The commission also urged consumers to conserve energy and use it efficiently, as well as report any illegal connections or theft of electricity to the authorities.
Tariff Hike and Reasons Behind It
The recent tariff increase in Ghana amounts to 18.36% for the second quarter of 2023, further burdening consumers who are already facing economic challenges. The decision to raise tariffs is primarily driven by the combined impact of currency depreciation, inflation, and increased gas costs.
The Public Utilities Regulatory Commission stated that utility companies are currently operating at a loss and require higher rates to maintain a reliable power supply. The commission also warned about the potential for electricity outages if the tariff adjustment is not implemented.
Ghana’s Economic Challenges
Ghana has been grappling with various economic challenges that have strained its financial stability. The country’s inflation rate has been on the rise, reaching high levels in recent times.
Additionally, Ghana’s debt burden has become increasingly burdensome, necessitating financial assistance from external sources.
The depreciation of the national currency, the Ghanaian cedi, has further compounded these challenges, making it more difficult for the government and businesses to manage their finances effectively.
Implications for Consumers and Businesses
The tariff increase will directly impact consumers and businesses in Ghana. Higher electricity costs will likely lead to increased operating expenses for businesses, potentially affecting their profitability and ability to expand. Consumers, already facing economic hardships, will bear the brunt of higher electricity bills, putting further strain on their budgets.