The Rise of MYTO Approaches

Daftar Isi

Understanding the Multi-Year Tariff Order (MYTO) and Its Implications for Ghana’s Energy Sector

Between 2025 and 2030, Ghana is projected to require approximately US$4.4 billion in new energy investment to achieve its National Energy Compact target of 99% electricity access by 2030, up from around 89% currently. Of this amount, US$2.6 billion is expected to come from private capital, while the remaining US$1.8 billion will be sourced from public and donor funding. The success of this ambitious goal hinges on the implementation of the Multi-Year Tariff Order (MYTO), a regulatory framework being developed by the Public Utilities Regulatory Commission (PURC). This initiative is more than just a technical adjustment—it represents a critical structural reform that could determine whether private investors are willing to commit large-scale capital to Ghana's energy sector.

What the MYTO Is Trying to Address

The MYTO aims to replace the current system of frequent and often politically driven tariff adjustments with a five-year tariff path for electricity and water services. Utilities such as ECG, VRA, GRIDCo, and GWL have submitted proposals outlining their capital and operational expenses for the period 2025–2030, and PURC is conducting nationwide hearings to evaluate these proposals with input from consumers, labor groups, and businesses. Some of the proposed increases are staggering, with ECG reportedly seeking a 239% rise in distribution service charges. However, PURC has not simply accepted these requests. Recent quarterly reviews have shown relatively modest increases, with some quarters even seeing no changes in water tariffs.

The key objective of the MYTO is to shift from short-term, reactive management to a structured, cost-reflective, and long-term approach to tariff setting. By treating tariffs as part of a broader development strategy, the regulator hopes to create a more stable environment for both utilities and investors.

Why the Reform Deserves Recognition

From an investor and policy standpoint, PURC is making several important moves:

• Moving Toward Predictability: A multi-year tariff order provides clarity for long-term capital planning. It allows utilities and independent power producers (IPPs) to manage balance sheets and capital expenditures over a five-year horizon, rather than reacting to quarterly or political shifts.

• Engaging Real Stakeholders: PURC has taken the MYTO process beyond traditional regulatory procedures by holding regional public hearings in cities like Kumasi, Koforidua, Sunyani, and Ho. This engagement brings together utilities, consumer groups, trade unions, and civil society, ensuring broader legitimacy and social buy-in.

• Promoting Transparency and Cost Recovery: PURC has consistently emphasized the need for a “resilient, transparent, and cost-effective utility framework.” This messaging signals to both domestic and international investors that Ghana is taking a serious approach to utility regulation, moving away from past issues of political interference or short-term decision-making.

Lessons from Global Tariff Regimes

Ghana does not need to reinvent the wheel when it comes to tariff systems. Many mature regulatory environments have established frameworks that infrastructure investors find appealing. These typically include:

• Clear cost-of-service logic
• Predictable adjustment mechanisms
• Automatic formulas for fuel, foreign exchange, and inflation pass-throughs
• Clearly defined review windows (e.g., annual minor adjustments and five-year major reviews)
• Performance-based incentives
• Robust revenue collection and creditworthiness measures

Where the MYTO Needs to Go Further

For the MYTO to successfully mobilize US$2.6 billion in private capital, it must address deeper structural challenges within the sector.

Revenue Collection and Sector Creditworthiness: Even with cost-reflective tariffs on paper, utilities cannot meet their financial obligations if actual cash collection remains weak. Chronic issues with commercial and technical losses, along with high levels of arrears, have undermined previous reform efforts. The MYTO should explicitly link tariff structures to loss-reduction targets, collection-rate benchmarks, and mechanisms such as ring-fencing and escrow accounts to protect cash flows from wider fiscal pressures.

Legacy Arrears: Ghana enters the MYTO period with a history of unpaid bills, unresolved power purchase agreements (PPAs), and sector debt. If these are not addressed through transparent mechanisms like securitization or restructuring, they risk dragging down the entire system. A credible tariff regime should also include a one-off balance sheet clean-up to ensure that new capital is not competing with old debts.

Balancing Tariff Increases with Social Protection: Some utility proposals suggest sharp increases, which could trigger backlash from labor groups and consumers. The challenge lies in finding a balance between cost recovery and affordability. Sophisticated regulators have found that targeted lifeline tariffs, gradual phasing of increases, and clear communication about the benefits (such as fewer outages and long-term price stability) can help maintain public support.

What Investors Will Be Watching For

Infrastructure funds, development finance institutions (DFIs), IPPs, and long-term lenders will closely monitor several key factors:

• Is the MYTO methodology published, stable, and predictable?
• How are FX and fuel price risks managed—through transparent formulas or ad-hoc decisions?
• Are loss-reduction and collection improvements set as hard targets with consequences for underperformance?
• How are legacy arrears treated?
• Is there government backing for the regulator’s independence?

A positive response to these questions would signal that Ghana is ready to attract the private capital it needs to meet its energy goals.

A Call for Stronger Implementation

While PURC deserves recognition for its efforts, the MYTO must deliver on three core objectives: financial sustainability for utilities and IPPs, social legitimacy for households and businesses, and regulatory predictability that can anchor billions in long-term private capital. Achieving all three is challenging, but without it, the ambitious targets outlined in Ghana’s National Energy Compact remain aspirational rather than achievable. The MYTO debate is not just about tariffs—it is about whether Ghana can align prices, policy, and capital in a way that ensures reliable electricity access and attracts the scale of investment the country seeks.