AGI calls on PURC to suspend electricity tariff hike over falling Global Oil prices

The Association of Ghana Industries (AGI) has appealed to the Public Utilities Regulatory Commission (PURC) to suspend the recently announced 3.5% electricity tariff increase, arguing that declining global oil prices could soon reduce electricity generation costs.

Speaking on Joy News’ PM Express on Tuesday, Chairman of AGI’s Economic Affairs Committee, Eric Defoe, said the timing of the tariff adjustment was inappropriate and could place an additional burden on manufacturers.

According to him, while the increase appears modest, its overall impact on production costs could be much higher.

“On paper, the increase may be 3.5%, but the effect on pricing could be significantly more,” he said, explaining that electricity costs influence several other components of the production chain.

Mr Defoe warned that the combined effect of higher electricity charges and other production expenses could push manufacturers’ overall costs up by between 5% and 10%.

He argued that PURC should have delayed the tariff review, noting that global petroleum prices, which had risen due to the recent conflict between the United States and Iran, are now falling following the end of hostilities.

According to him, since fuel prices are a key component in the electricity tariff adjustment formula, the regulator should reassess the situation before implementing any increase.

“If fuel prices are coming down, then perhaps the commission should wait a little longer and evaluate the impact before increasing tariffs,” he said.

Mr Defoe further maintained that quarterly tariff reviews should not automatically result in higher electricity prices.

“They don’t have to increase tariffs simply because it’s time for a quarterly review. They should consider prevailing market conditions and determine whether an adjustment is justified,” he stated.

He also questioned the need for consumers to shoulder additional electricity costs when they are already paying fuel levies intended to support power generation and settle legacy debts within the energy sector.

“We are already contributing significant resources through fuel levies to support electricity generation and address legacy debts. Asking consumers to pay more again does not make sense,” he argued.

Mr Defoe insisted that PURC should have waited for the effects of recent geopolitical tensions on global energy markets to subside before announcing any tariff adjustment.

He added that key macroeconomic indicators, including inflation, interest rates and the exchange rate, have shown signs of improvement, making the latest increase difficult for industry players to understand.

“I’m not sure what other factors informed the adjustment. Interest rates are coming down, the exchange rate is relatively stable, inflation has eased, and fuel prices are declining. So it is difficult to understand the basis for the increase,” he said.