ECG Economist: Tariff Hike Defies Economic Reality

The recent electricity tariff adjustment does not align with typical macroeconomic factors, according to Energy Economist with the Electricity Company of Ghana (ECG), Ebenezer Baiden.

Mr. Baiden, speaking on Joy News’ PM Express on December 9, explained that the price hike is driven by a new structure focused on recouping long-term investments and settling existing debts, rather than the usual pressures from inflation and exchange rate fluctuations.

He clarified that this adjustment represents a departure from the regular quarterly review process. “So what it is is that this adjustment doesn’t look at macroeconomic indicators,” he said. He further noted that the standard quarterly mechanism considers elements like exchange rates, inflation, and the fuel mix.

However, the current increase is part of a three-to-five-year structural plan aimed at addressing the company’s financial obligations and past investments. “This is a structural adjustment, a three to five-year adjustment and it’s looking at the investments you’ve made over time, all the debts you have incurred to clean your books and then now reset you again for the next mile – so this is what effectively the case has been,” Mr. Baiden stated.

According to him, ECG has already completed and launched several new projects, which come with significant financial commitments. A key area of investment, he highlighted, is the company’s ongoing digitisation programme.

“The digitisation drive, for example, of ECG has transformed our operations significantly. Now today customers can buy credits without even going out of their homes. You can recharge at home and all these are the effects of some of the investments that have happened,” he explained.

While reaffirming ECG’s commitment to providing efficient service, Mr. Baiden acknowledged the need for customer support to maintain operations. “Services will continue to deliver services, quality services to customers but it gets to a point where you will need that push from customers,” he said.

He stressed that the approved 9.8% increase is insufficient to fully cover the company’s needs. “So as we sit here, the 9.8%, we say it’s not adequate but what can we do? We should now use it to still deliver the same services to customers.”

The Electricity Company of Ghana (ECG) has assured the public that it will continue to exert every effort to ensure a stable power supply, despite acknowledging that the latest tariff adjustment does not meet the company’s operational requirements.

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