The Association of Ghana Industries (AGI) has raised concerns over the Public Utilities Regulatory Commission’s (PURC) decision to increase electricity tariffs by 3.5%, warning that the adjustment could drive manufacturing costs up by as much as 10%.
Although the tariff increase appears modest, AGI says its impact will extend far beyond electricity bills, placing additional financial pressure on businesses already working to recover from recent economic challenges.
Speaking on Joy News’ PM Express, Chairman of AGI’s Economic Affairs Committee, Eric Defoe, explained that electricity is a major production input for manufacturers, meaning even a small increase can trigger higher costs throughout the production process.
“Nominally it appears to be only 3.5%, but the cumulative effect on production could rise to between 5% and 10%,” he said.
According to AGI, the higher tariff is expected to increase expenses related to machinery, cold storage, logistics, packaging, raw material processing and supplier services. These additional costs could eventually affect the prices consumers pay for locally manufactured goods.
The association is particularly worried about energy-intensive industries, where electricity accounts for a significant share of production costs. It warned that higher utility bills could squeeze profit margins, reduce working capital and slow investment.
AGI also questioned the timing of the tariff adjustment, noting that Ghana’s economic outlook has recently improved. Inflation has declined, the cedi has become more stable and interest rates have started easing, developments the association believes should have created room to avoid imposing fresh cost burdens on businesses.
The group further argued that falling global oil prices, following reduced tensions in the Middle East, should have been taken into account before approving another increase. It believes PURC could have delayed the quarterly review or adopted a more cautious approach to determine whether lower fuel costs could ease pressure on electricity tariffs.
AGI stressed that quarterly tariff reviews should not automatically result in higher prices, saying regulators should consider broader economic conditions and the challenges facing businesses.
The association also questioned why consumers and businesses are facing higher electricity charges after the government recently introduced new fuel-sector levies aimed at supporting power generation and clearing long-standing energy sector debts.
According to AGI, businesses are now carrying multiple energy-related costs through tariffs, levies and indirect price increases.
While acknowledging the financial challenges confronting Ghana’s energy sector, including legacy debts, fuel supply obligations and generation costs, AGI maintained that affordable and reliable electricity is essential for industrial growth, job creation and export competitiveness.
Manufacturers have long identified high electricity costs as one of the biggest obstacles to doing business in Ghana. The association warned that if production costs rise as projected, some companies may absorb the additional expense at the cost of lower profits, while others may be forced to pass it on to consumers through higher prices.
AGI believes that sustaining Ghana’s industrial recovery will require more than lower inflation and a stable exchange rate. It is urging regulators to adopt a broader approach to tariff setting by considering the cumulative cost burden on industry, global fuel price trends and the country’s competitiveness as a manufacturing destination.
