- AGI Warns 40% Electricity Cost Burden Is Squeezing Ghanaian Businesses
The Association of Ghana Industries has raised fresh concerns over the cost of electricity to businesses, warning that utility charges are becoming a major drag on industrial competitiveness at a time when companies are expected to invest, expand production and support Ghana’s 24-hour economy agenda.
AGI’s intervention reflects a broader concern among manufacturers that the cumulative effect of electricity tariff adjustments is pushing operating costs to levels that are increasingly difficult to absorb.
The business group has argued that electricity already represents a substantial share of production costs for many companies and that repeated tariff increases threaten to weaken margins, discourage investment and ultimately feed through into higher consumer prices. AGI officials have previously indicated that electricity can account for about 30.00% of production costs for some manufacturers.
The concern has intensified after the Public Utilities Regulatory Commission increased electricity tariffs by 3.49%, effective July 1, 2026, alongside a 0.85% adjustment in water tariffs. PURC said the review reflected movements in the exchange rate, inflation, generation mix and fuel costs.
AGI has warned that the impact of an electricity adjustment can multiply through production chains because manufacturers do not consume power in isolation. Suppliers, transport operators, packaging businesses and other service providers also face higher costs, which are eventually reflected in the prices charged to manufacturers.
Eric Defoe, Chairman of AGI’s Economic Affairs Committee, warned recently that even a seemingly modest tariff adjustment could generate a considerably larger increase in production costs.
“It would appear so nominally, but the effect may not be 3.5% on pricing; it may go higher,” he said, with AGI estimating that the latest electricity adjustment could ultimately push some production costs up by as much as 10%.
That compounding effect matters for an economy attempting to increase domestic manufacturing and reduce dependence on imports.
Electricity is one of the few production inputs that almost every industrial operation requires. High power costs therefore affect firms regardless of whether they manufacture food, pharmaceuticals, metals, plastics, textiles or consumer products.
For export-oriented companies, the problem becomes one of competitiveness.
A Ghanaian manufacturer paying significantly more for power than competitors in alternative production locations must either accept lower margins, increase prices or improve productivity enough to offset the difference. If none of those options is commercially viable, investment can migrate elsewhere.
The concern is particularly relevant to the government’s 24-hour economy programme.
Businesses operating multiple shifts consume more electricity, meaning the success of policies encouraging round-the-clock production will depend partly on whether firms can afford the additional energy required.
Tsonam Cleanse Akpeloo, Dean of AGI’s Greater Accra Regional Branch, has previously argued that rising electricity tariffs could work against that objective.
“In an era of a 24-hour economy, where we are encouraging companies to work around the clock and produce for the nation, increasing electricity tariffs sends the wrong signal. Electricity is one of the most important inputs for businesses operating at night,” he said.
AGI’s objection is not simply that utility companies need more revenue.
The association argues that a larger part of the sector’s financial challenge should be addressed through improvements in efficiency rather than repeated transfers of costs to consumers.
AGI has pointed particularly to technical, commercial and distribution losses within the electricity system, arguing that businesses should not continually absorb the financial consequences of operational inefficiencies.
“Our view is that the utility companies should rather be focusing on tackling the losses,” Mr Akpeloo said in June.
That argument goes to the centre of Ghana’s electricity-sector economics.
Utilities require tariffs sufficient to cover generation, transmission and distribution costs, maintain infrastructure and remain financially viable. But if significant losses persist across the system, tariff increases can become a substitute for efficiency improvements rather than a complement to them.
PURC has pushed back against that interpretation, saying tariff reviews are based on an established methodology and that the regulator continues to pressure utilities to reduce commercial and distribution losses while moving the sector towards full cost recovery.
For businesses, however, predictability is almost as important as the tariff level itself.
Manufacturers plan production, pricing, wages and investment months in advance. Repeated adjustments make those forecasts less reliable and can delay capital expenditure where companies cannot confidently estimate future operating costs.
The latest debate also comes against a backdrop of improving macroeconomic indicators, which has made businesses more questioning of upward utility adjustments.
AGI has argued that lower inflation and periods of greater currency stability should eventually translate into lower cost pressures within the electricity supply chain, especially where imported fuels and equipment are priced in foreign currency.
PURC, however, has said even marginal exchange-rate movements can affect electricity costs because much of the sector remains exposed to foreign-currency obligations and imported inputs.
Artificially suppressing tariffs can weaken utilities, increase arrears and ultimately create fiscal liabilities for government. But continually increasing tariffs without materially reducing losses can undermine businesses, investment and industrial competitiveness.
For Ghana, the sustainable solution lies between the two.
The power sector must recover legitimate costs, while utilities are simultaneously required to improve collection, reduce technical and commercial losses and demonstrate that tariff increases are buying greater efficiency and reliability.
For industry, that accountability is becoming increasingly important.
Electricity is no longer simply a utility bill. It is an industrial policy variable.
If power costs continue rising faster than productivity, Ghana may find it increasingly difficult to persuade manufacturers to expand capacity, operate additional shifts or compete successfully with imported goods.
The question facing policymakers is therefore not simply whether electricity tariffs are sufficient to sustain the power sector. It is whether Ghana can sustain the power sector without pricing its productive sector out of competitiveness.
