Domestic electricity tariff regime ranked among Africa’s best performing – PURC study

Ghana remains one of the best-performing and most balanced electricity tariff jurisdictions in Africa, according to a new comparative study by the Public Utilities Regulatory Commission (PURC).

The analysis, conducted in line with the PURC Act 1997 (Act 538), places domestic electricity pricing near the continental median – reflecting what the regulator describes as a “cost-reflective yet socially responsible” tariff framework.

Drawing on cross-sectional tariff data from selected African countries as of March 2025, the study examined regional tariff structures, pricing methodologies and sector fundamentals.

It aims to guide regulatory policy, promote transparency and support the pursuit of sustainable, financially viable electricity supply.

Balanced, cost-based tariff framework

Ghana operates a hybrid, cost-reflective tariff-setting system in which tariffs are determined based on the actual cost of generation, transmission and distribution. This approach seeks to ensure financial sustainability for utilities – including ECG, NEDCo and VRA – while cushioning consumers against excessive increases.

This positions Ghana alongside more reform-driven markets such as Kenya, Uganda and South Africa, rather than subsidy-dependent systems in Ethiopia and Sudan where tariffs are kept artificially low at significant fiscal cost.

Residential customers in Ghana are charged using block tariffs, with lifeline rates designed to protect low-income households and higher-use bands applied to recover full supply costs.

How Ghana compares across the continent

The report highlights wide disparities in electricity prices across Africa, shaped by market size, generation mix, subsidy policies and regulatory maturity.

Central Africa:
Tariffs in countries such as the Central African Republic and Chad are among the highest and most volatile, reflecting constrained infrastructure and low economies of scale. Ghana’s tariffs are significantly lower, supported by better access, more reliable supply and consistent regulation.

Southern Africa:
Markets such as South Africa and Namibia maintain some of the continent’s highest industrial tariffs due to environmental levies and infrastructure costs. Ghana’s tariffs are lower, though similarly grounded in cost-recovery rather than heavy subsidisation.

West Africa:
Ghana sits in the moderate range within the sub-region – higher than heavily subsidised systems like Nigeria, but lower than smaller, inefficient grids such as those in Liberia and Sierra Leone. PURC’s regulatory discipline contributes to relative tariff stability and improved cost recovery.

East Africa:
Tariffs in hydropower-dependent countries, including Ethiopia and Uganda, are generally lower. Ghana’s tariffs appear higher by comparison, driven by its substantial thermal generation component which is sensitive to fuel prices and exchange rate movements.

North Africa:
Egypt, Algeria, and Morocco maintain some of Africa’s lowest tariffs, underpinned by substantial subsidies and low-cost fossil fuel resources.  Ghana’s tariffs are higher, though PURC notes that the North African model is financially unsustainable in the long-term.

Regulatory models: Ghana among the continent’s most advanced

The study notes increasing diversity in electricity governance across Africa as countries shift from vertically integrated utilities to unbundled structures, enabling competition and private-sector participation.

Tariff methodologies vary widely:

• Cost-Plus/Rate-of-Return: Côte d’Ivoire, The Gambia, Mali
• Price-Cap: Cape Verde, Niger, Senegal, Kenya
• Revenue-Cap: Burkina Faso, Togo, Tanzania
• Hybrid Models: Ghana, Nigeria, South Africa

Ghana is among a limited group of countries – alongside South Africa, Egypt, Morocco, Mali and Niger – whose regulators explicitly compute the weighted average cost of capital (WACC) to guide investment remuneration.

A balanced and competitive tariff regime

PURC concludes that the country’s tariff system represents a balanced regulatory model, combining cost-reflective pricing with targetted subsidies for the poor. While residential tariffs are higher than in heavily subsidised economies, they remain below those in fully market-driven systems such as Namibia and South Africa.

By maintaining commercial and industrial tariffs close to the African average, Ghana preserves its competitiveness for businesses while ensuring long-term sustainability of its utilities. PURC’s periodic tariff adjustment mechanism – which accounts for exchange rate movements, fuel prices and efficiency benchmarks – remains central to preserving sector stability.

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