The Association of Ghana Industries (AGI) has urged the Public Utilities Regulatory Commission (PURC) to reconsider its decision to increase utility tariffs for the third quarter of the year, citing concerns over the impact on the industrial sector and the wider economy.
The new tariff rates, which come into effect on October 1, will see electricity prices rise by 3.02%, while water tariffs will increase by 1.86%. PURC attributed the increases to fluctuations in the exchange rate, a factor that has significantly affected the cost of utilities in recent months.
Speaking to Citi Business News in Accra on Monday, Tsonam Akpeloo, the Greater Accra Regional Chairman of AGI, expressed the association’s deep concerns about how these tariff hikes would affect manufacturers.
He warned that the increases would drive up operational costs for companies, many of which are already struggling with high overheads due to previous price hikes. Akpeloo highlighted that the tariff adjustments could have a negative ripple effect across the economy, reducing consumers’ purchasing power and making it even harder for industries to stay afloat.
“We’re asking the regulatory authority to be concerned about the flight of index and ensure that at least in the next quarter, they either take steps to reduce it or maintain it at the previous rate because this increment is not going to be going well for industrial development,” Akpeloo said.
The AGI chairman stressed that the increased costs of electricity and water would be particularly challenging for industrial manufacturers, many of whom are grappling with rising costs across the board. For companies already operating on thin margins, absorbing the additional costs could prove difficult, if not impossible.
Akpeloo noted that in many cases, businesses are unable to pass these costs onto consumers, who are also feeling the pinch of rising prices in various sectors of the economy.
As a result, companies may be forced to absorb the higher costs themselves, which could lead to further financial strain and, in some cases, closures.
“As I mentioned, it would be a price that will easily have to be absorbed by the producer, because at this rate, we cannot push it to the consumer,” Akpeloo said. “A lot of companies are really getting out of business because of these high levels of utility tariffs.”
The increase in utility costs comes at a time when Ghana’s economy is facing significant challenges, with inflation and exchange rate volatility contributing to rising costs in several sectors. For manufacturers, the rising costs of production, combined with the increased price of utilities, are creating a difficult operating environment.
Many companies are already feeling the pressure, and the AGI has voiced concerns that the latest tariff hikes could exacerbate these issues, leading to potential layoffs and reduced production.
Akpeloo’s remarks echo the concerns of many business leaders in Ghana who have warned that the continued rise in utility costs is unsustainable for the country’s industrial sector. The AGI has consistently called on the government and regulatory bodies to consider the broader economic impact of tariff increases, particularly in light of the country’s goal to strengthen its industrial base and create jobs.
For businesses in the manufacturing sector, energy and water costs represent a significant portion of their operational expenses, and further increases could undermine their ability to remain competitive.
In response to the PURC’s decision, the AGI is urging the regulatory body to consider alternative ways of managing utility pricing, particularly during times of economic uncertainty. Akpeloo suggested that the PURC should explore options to stabilize utility costs in the future, either by reducing the tariffs or maintaining them at current levels for an extended period.
He emphasized that doing so would help alleviate the financial burden on businesses and allow them to focus on growth and innovation, rather than struggling to keep up with rising costs.
While the PURC has justified the tariff increases based on exchange rate fluctuations, many industry players believe that more can be done to shield businesses from the impact of these adjustments.
The AGI has previously called for greater transparency in the process of setting utility prices, as well as the introduction of measures to mitigate the effects of exchange rate volatility on utility costs.
For now, businesses in Ghana are bracing for the impact of the latest tariff hikes, which will take effect in a matter of days. The AGI’s call for reconsideration is unlikely to result in an immediate reversal of the decision, but it highlights the growing pressure on the government and regulatory bodies to address the concerns of the industrial sector.
As Ghana seeks to diversify its economy and reduce its reliance on imports, maintaining a competitive industrial sector is crucial to achieving these goals. However, if utility costs continue to rise at the current pace, many fear that the country’s industrial ambitions could be at risk.
The AGI remains committed to advocating for policies that support the growth and sustainability of Ghana’s industries. The association continues to engage with the PURC and other stakeholders in an effort to find solutions that will protect businesses from the worst effects of rising costs while ensuring that utility providers can maintain the infrastructure and services that are essential for the country’s development.
As the debate over utility tariffs continues, businesses across Ghana will be watching closely to see whether the AGI’s calls for relief are heeded.
In the meantime, manufacturers are left to navigate the challenges of rising operational costs, uncertain economic conditions, and the growing need to remain competitive in an increasingly globalized market.
