The International Monetary Fund (IMF) has backed calls proposing a significant increase in Ghana’s tariffs.

Addressing journalists in Washington, D.C., on Thursday, September 11, 2025, the IMF’s Director of Communications, Julie Kozack, described the proposed adjustments vital to saving Ghana’s energy sector.

“What is essential from our perspective is that any tariff adjustments in the electricity sector aim to address longstanding inefficiencies in the sector, importantly, that they support much-needed investment in the electricity sector, and also that they are aimed at preventing the accumulation of arrears in the energy sector.

“More generally, we are continuing to support broader sector reforms, including private sector participation in ECG operations,” she noted.

On Tuesday, September 9, the Public Utilities Regulatory Commission (PURC) received proposals from eight utility companies calling for a significant adjustment in utility tariffs to ensure they can fully operate at their capacities.

Proposals from the electricity distributors and the water provider for the 2025–2029 tariff period cite rising operational costs and the need to maintain efficient service delivery.

The eight companies include the Electricity Company of Ghana (ECG), Volta River Authority (VRA), Northern Electricity Distribution Company (NEDCo), Ghana Water Limited (GWL), and the Ghana Grid Company (GRIDCo), Ghana National Gas Limited, among others.

ECG is pushing for a massive 225% hike in its distribution service charge. For instance, a household consuming 150 kWh monthly would pay an additional GHS64, while a residence using 100 kWh per month would pay about GHS43 more in distribution charges.

As part of ECG’s request, the current Distribution Service Charge (DSC) of 19 pesewas per kilowatt-hour should be raised to nearly 62 pesewas per kilowatt-hour.

“The PURC will undertake the major adjustment in the 4th quarter of 2025 to reflect capacity charges, additional liquid fuel usage, and additional capex. The current charge is below industry benchmarks, and cedi depreciation has reduced its value. US$408m spent on network upgrades and smart meters,” parts of ECG’s petition read.

ECG has emphasised that the adjustment has long been overdue, noting that in 2022 it proposed 39.95 pesewas, but only 19.04 pesewas was approved.

According to ECG, it has invested $48 million in network upgrades and smart metering systems to enhance power reliability, reduce outages, and align tariffs with international industry standards, yet these efforts have not yielded the expected cost recovery.

Furthermore, ECG has projected an annual revenue of GHS9.5 billion between 2025 and 2029 if the new charges are approved. The proceeds, according to the utility company, would be allocated to cover operational costs, depreciation of assets, staff salaries, and the recovery of recent capital expenditures.

VRA is seeking a 59% increase to cover rising costs of producing electricity. If approved, the current tariff of 45.0892 Ghana pesewas per kilowatt-hour will be increased to 71.8862 pesewas per kilowatt-hour for the Bulk Generation Charge.

Speaking during a public hearing on Tuesday, September 9, Senior Economic Analyst at VRA, Evans Somuah Mensah, said, “Over the years, VRA has not been compensated for doing this work to assist the national connectivity system. We are saying that on an annual basis, VRA should be given compensation $30.49 million for Akosombo power generation, and Kpone Thermal plant, a little bit of $30,000.

“Justification for tariff increase, we are saying that we want to recover the cost of our power supply to the distribution companies, and recover the cost of transmission and also be compensated for the provisions of ancillary services. We are requesting the PURC to increase the existing tariff of BGC from 45.0892 Ghana pesewas per kilowatt-hour to 71.8862 Ghana pesewas per kilowatt-hour.”

VRA has justified the increase as necessary to fully recover the cost of power generation supplied to distribution companies (DISCOs). It has noted that sustaining reliable electricity generation and meeting its operational and financial obligations will become increasingly difficult if its proposal is rejected.

Ghana Water Limited has proposed a jump from GH¢5.28 per cubic metre to GH¢20.09 per cubic metre, seeking regulatory approval for a 281% increase in its water tariff.

NEDCo has also called for its tariff to be increased to 153.03 pesewas per kilowatt-hour from the current 56.474 pesewas, representing a 171% rise. GRIDCo, meanwhile, is demanding that the current 5.6422 pesewas per kilowatt-hour on its transmission service tariff be raised to 12.9768 pesewas per kilowatt-hour.

Ghana National Gas Limited is proposing to increase its tariff from US$1.10 to US$2.10 per million metric British thermal units (MMBtu)However, the onus lies on PURC to carefully review the requests, assess whether the increases are justified, and determine how the costs will be distributed.

In July this year, electricity tariffs increased by 2.45% across the board, with no increase in water tariffs. The adjustments, according to PURC, were carried out in line with the Commission’s Quarterly Tariff Review Mechanism, which tracks and incorporates movements in key factors beyond the control of the Utility Service Providers (USPs).

These factors include the exchange rate between the US dollar and the Ghana Cedi, the domestic inflation rate, the electricity generation mix, and the cost of fuel, mainly natural gas.

According to the Commission, additional factors considered before concluding the hike in tariffs include outstanding debt of GHS488 million carried over from the previous three quarters, reserve capacity for grid stability and reliability, and the inclusion of 27% of the cost of alternative fuels such as Distillate Fuel Oil (DFO), Heavy Fuel Oil (HFO), and Light Crude Oil (LCO).

The Commission expressed gratitude to stakeholders for their support as it continues to implement the Quarterly Tariff Reviews in accordance with its Rate Setting Guidelines to address changes in operational conditions of the service providers.

Majority Leader Mahama Ayariga justified PURC’s decision to increase electricity tariffs. Speaking on the floor of Parliament on Friday, June 27, he noted that there is a need for ECG to be able to settle its growing debt.

"You all know that the whole of last year and before that, there was an effort to prevent the PURC from adjusting the tariffs. So that whole period, there was no adjustment, and you know very well that bills were accruing; payments had to be made. ECG is accumulating huge [debt] and it has to be paid, so who is supposed to pay? Is it not the consumer?" he questioned.

According to him, failure to address ECG's indebtedness would render the company powerless in supplying power to its consumers.

"And if you are not adjusting the tariffs to enable ECG to pay, ECG is going to collapse. They are no longer able to buy the input needed to keep the generators on, and we are going to have a power outage; the bills have to be paid."

"The bill has to be paid. So if PURC is doing its work, I do not think there is a basis for saying that because we have improved the economy, it doesn’t mean that the debt at ECG will just be whisked away. The bill has to be paid partly by consumers," he asserted.