Parliament on Friday, June 27, witnessed a fierce defence of the Public Utilities Regulatory Commission's (PURC) recently approved 2.45 per cent electricity tariff increment, with Majority Leader Mahama Ayariga asserting the necessity of the hike to avert the collapse of the Electricity Company of Ghana (ECG).

The new tariffs are set to take effect from July 1, 2025.

Speaking on the floor of Parliament, Mr. Ayariga directly addressed public concerns and opposition to the tariff adjustment, explaining that it was a critical measure to offset mounting debts within the power sector.

"You all know that the whole of last year and before that, there was an effort to prevent the PURC from adjusting the tariffs. So that whole period, there was no adjustment, and you know very well that bills were accruing; payments have to be made," Mr. Ayariga stated.

He highlighted the precarious financial position of ECG, a state-owned power distributor, which has been accumulating significant liabilities due to unadjusted tariffs.

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"ECG is accumulating huge [debt] and it has to be paid, so who is supposed to pay? Is it not the consumer?" he questioned, emphasising the unavoidable reality that the cost of providing electricity must ultimately be borne by its users.

He warned of severe consequences if the tariffs are not adjusted: "And if you are not adjusting the tariffs to enable ECG to pay, ECG is going to collapse. They are no longer able to buy the input needed to keep the generators on, and we are going to have a power outage; the bills have to be paid."

The Majority Leader dismissed arguments that an improved macroeconomic environment should automatically negate the need for tariff adjustments.

"The bill has to be paid. So if PURC is doing its work, I do not think there is a basis for saying that because we have improved the economy, it doesn’t mean that the debt at ECG will just be whisked away. The bill has to be paid partly by consumers," he asserted.

The PURC's decision to implement the 2.45% increment, part of its routine quarterly review mechanism, has indeed drawn mixed reactions across the country.

While the commission cited factors like projected inflation at 20.67%, an exchange rate of GH₵10.3052 to the US dollar, and an increase in the weighted average cost of natural gas, some consumer groups and the Minority Caucus have questioned its justification given recent macroeconomic stability.

ECG has historically faced significant financial challenges, including high technical and commercial losses and substantial debts owed to power generators.

Reports have indicated billions of Ghana Cedis in accumulated debt and revenue under-declarations in previous years, placing a heavy burden on government finances and impacting the stability of the power supply.

The Public Utilities Regulatory Commission (PURC) has also noted GH₵488 million in outstanding revenues from previous quarters that this adjustment aims to begin clearing.

The Minister for Energy and Green Transition is expected to appear before Parliament next week to provide further clarity on the tariff review process and its broader implications for Ghana's energy sector.

For now, the Majority Leader's stance underscores the government's position that the tariff hike, though unpopular, is a necessary step towards ensuring the financial viability of ECG and maintaining a stable power supply for consumers nationwide.