Copyright ghanamma
Ghana’s escalating electricity tariffs are creating a dangerous incentive structure that pushes legitimate businesses toward illegal connections as a survival strategy, according to the Food and Beverages Association of Ghana (FABAG). The Association has warned that proposed tariff increases under consideration by the Public Utilities Regulatory Commission will further destabilize an already fragile business environment already weakened by job losses, reduced production, and closures among small and medium-sized enterprises. FABAG argues that affordability challenges have transformed electricity access from a utility into an increasingly unfair burden for compliant users. When energy costs become unmanageable relative to business earnings, the Association notes, honest operators face pressure to abandon formal systems entirely. This dynamic creates what FABAG describes as an inverted moral landscape where regulatory compliance becomes economically irrational and illegal alternatives appear increasingly attractive by comparison. The pricing structure generates perverse incentives that fundamentally undermine sector integrity. Businesses that dutifully pay tariffs absorb costs associated with widespread waste, technical losses, and poor collection practices throughout the utilities system. Meanwhile, operators who bypass the formal system avoid these burdens entirely, creating competitive disadvantages for honest participants. FABAG characterizes this outcome as “a system that punishes honesty and rewards inefficiency,” a dynamic that deteriorates business culture and encourages regulatory circumvention. Industry observers and energy analysts point to deeper structural problems rather than revenue insufficiency as the root cause. Ghana’s industrial competitiveness has eroded through years of tariff increases that fail to correspond with service improvements or reliability enhancements. The underlying issues, analysts argue, stem from technical losses, sector inefficiency, and governance lapses that tariff increases alone cannot resolve. Simply extracting more revenue from users without addressing operational problems merely transfers sector dysfunction onto businesses and consumers. FABAG insists that sustainable solutions require systemic reform rather than incremental price increases. The Association employs a direct metaphor to illustrate the problem: attempting to conserve water by pouring more into a leaking bucket produces no meaningful result. Similarly, raising tariffs without addressing waste and inefficiency cannot sustainably improve sector finances. The Association has called for a comprehensive audit of actual generation and distribution costs to establish factual baselines for policy decisions. The group has outlined specific reform priorities. These include implementation measures to reduce operational inefficiency and eliminate corruption, targeted relief for energy-intensive productive sectors including manufacturing, agro-processing, and cold storage facilities that face the heaviest power cost burdens. FABAG emphasizes that electricity should serve as an economic enabler rather than a wealth extractor, cautioning that the current trajectory risks discouraging investment and undermining job creation across the economy. The Association’s warning reflects growing tensions between utility sector financial sustainability and business sector viability, with formal compliance increasingly appearing economically irrational to operators already struggling with margins compressed by multiple cost pressures.
