The International Monetary Fund (IMF) has thrown its weight behind reforms in Ghana’s electricity sector, saying any approved tariff adjustments must tackle inefficiencies, support new investments, and prevent the build-up of debt.
IMF Communications Director Julie Kozack made the remarks in response to questions from EIB Network’s Emmanuel Agyabeng at a Washington press briefing on Thursday, September 11, 2025.
“What is essential from our perspective is that any tariff adjustments in the electricity sector aim to address longstanding inefficiencies. Importantly, they should support much-needed investment and prevent the accumulation of arrears,” Ms. Kozack said.
“More generally, we are continuing to support broader energy sector reforms, including private sector participation in ECG operations. This is part of a broader effort to strengthen state-owned enterprises and reduce fiscal risks.”
The IMF’s comments come as the Public Utilities Regulatory Commission (PURC) considers fresh tariff proposals for the 2025–2029 regulatory period.
The Electricity Company of Ghana (ECG) is seeking a more than 200% increase in its Distribution Service Charge (DSC1), from 19.0384 pesewas/kWh to an average of 61.8028 pesewas/kWh. ECG argues that the hike is critical for cost recovery, citing inflation, currency depreciation, and mounting operational costs. The company insists that without a significant adjustment, Ghana’s distribution infrastructure and service reliability could deteriorate further.
Similarly, the Northern Electricity Distribution Company (NEDCo) has proposed raising its tariff from 56.47 pesewas/kWh to 153.03 pesewas/kWh—a 171% increase. NEDCo argued the move would improve collection rates and cut distribution losses from 31% to 21% by 2029.
But the proposals have sparked public outcry and analyst criticism. Many argue that ECG and NEDCo must first tackle technical and commercial losses, power theft, and governance lapses before passing costs to consumers.
President John Dramani Mahama, in his maiden media engagement on September 10, 2025, reminded Ghanaians that tariff requests are proposals, not final decisions:
“PURC will look at all the factors—exchange rates, production costs, and consumer concerns—before determining what increase is allowed. That you hear ECG propose 225% does not mean PURC will approve it.”
He explained that his administration has empowered ECG to deal with persons involved in power thefts to help reduce losses and impact tariffs positively
The Ministry of Energy and Green Transition also appealed for patience, with Chairperson of the PURC’s stakeholder committee, Nana Yaa Jantuah assuring the public that the review process will weigh economic pressures on consumers alongside the utilities’ needs.
ECG and NEDCo have further suggested a dedicated street lighting tariff to ensure reliable funding for the installation and maintenance of public lighting nationwide—a move they say is essential for safety and economic activity in both urban and rural areas.
Energy sector shortfalls have strained Ghana’s finances for years, with below-cost-recovery tariffs creating fiscal risks and deterring investment. The IMF has made energy reform a cornerstone of its ongoing program with Ghana, emphasizing that credible, transparent tariff policies are key to restoring investor confidence and protecting the economy.
With PURC’s final decision pending, all eyes are now on how the government balances consumer protection, fiscal responsibility, and the urgent need for a financially viable power sector.
