Beginning October 1, 2024, electricity and water tariffs in Ghana are set to rise. The electricity tariff will go up by 3.02%, while water bills will see a 1.86% increase, adjustments designed to address the ongoing challenges facing utility providers, following the Public Utilities Regulatory Commission’s (PURC) 2024 Third Quarter Review
For instance, if you currently pay GH₵200 for electricity, you will now be paying GH₵206.04 after the 3.02% increase. Similarly, for water, if your current bill is GH₵150, it will increase to GH₵152.79 following the 1.86% hike. For those using prepaid meters, this means it will now cost you GH₵206.04 to consume the same amount of electricity you previously paid GH₵200 for.
According to the Public Utilities Regulatory Commission (PURC), these changes are the result of multiple factors that have increased the cost of delivering these essential services.
A significant driver is the depreciation of the Ghana Cedi, which has fallen by 4.96% against the US Dollar between the second and third quarters of 2024. When the cedi weakens, the cost of importing critical inputs such as fuel and machinery for energy generation increases, pushing up the overall expenses for utility companies.
Another factor is inflation, which measures the general rise in prices over time. Although inflation has eased slightly, moving from 24.38% in Q2 to 22.27% in Q3, it still contributes to the rising cost of producing and delivering electricity and water. Inflation affects everything from the cost of fuel to materials needed for infrastructure, making it more expensive for utility providers to operate without adjusting their rates.
An additional consideration is the Weighted Average Cost of Gas (WACOG), a metric that reflects the price of natural gas, which powers a significant portion of Ghana’s electricity production. While the cost of gas has declined slightly, from $8.0422/MMBtu to $7.8368/MMBtu, it wasn’t enough to offset other rising costs in the system.
These factors combined have led to an under-recovery of GH₵173.98 million, meaning that the current tariffs are not sufficient to cover the true cost of providing electricity and water services. The tariff increases are intended to close this gap, ensuring that utility companies can continue to deliver reliable services to households and businesses across the country.
