INSTEPR Questions Finance Minister’s WACOG Announcement Amid PURC’s Tariff Review Discrepancy
The Institute for Energy Policies and Research (INSTEPR) has raised concerns over what it describes as an unprecedented announcement by the Finance Minister on the Weighted Average Cost of Gas (WACOG), a key input in the pricing of electricity tariffs.
According to the Executive Director of INSTEPR, Kwadwo Poku, “For the first time in the 4th Republic, the Finance Minister announced a new price for natural gas, which is used in electricity generation.”
He noted that INSTEPR found the Minister’s pronouncement “very strange” and subsequently issued a statement on March 11, 2025, challenging the move.
The statement from INSTEPR cited section 137 (iii) of the 2025 Budget Statement in which the Minister revised the WACOG from $7.836 to $8.45 per MMBtu. However, INSTEPR argues that the determination of the WACOG is within the sole purview of the Public Utilities Regulatory Commission (PURC), and not the Ministry of Finance.
“This action by the Finance Minister is very unusual, since the calculation of WACOG is undertaken by the PURC during their quarterly tariff review,” the statement read.
INSTEPR’s concerns appear to have been validated by the PURC’s latest tariff review, released on April 11, 2025. In the review, the Commission announced a 14.75% increase in electricity tariffs but notably used a lower WACOG of $7.6289 per MMBtu — a reduction of $0.207 from the Minister’s proposed figure.
The PURC’s decision to disregard the Finance Minister’s figure not only affirms INSTEPR’s position but also raises questions about the basis for the Minister’s announcement.
INSTEPR is therefore urging the Parliamentary Committees on Energy and Finance to summon the Finance Minister to clarify the rationale behind his statement and to assess the potential fiscal implications.
“If the PURC’s lower WACOG prevails, it could affect the government’s revenue projections from the energy sector. The question now is: who advised the Minister to announce a price outside the PURC’s remit, and will this discrepancy worsen the already precarious energy sector debt?” INSTEPR queried.
The WACOG serves as a central component in determining electricity tariffs and has broader implications for cost recovery within the power sector. Any inconsistencies in its pricing could potentially distort financial planning and exacerbate existing liabilities in Ghana’s energy value chain.
It remains to be seen whether Parliament will act on INSTEPR’s call and probe the decision-making process that led to the Finance Minister’s announcement.
