Quality Of Regulatory Governance In Ghana: A Deep Dive Into PURC’s Regulatory Oversight Of Electricity And Urban Water Sectors

In Ghana, the effectiveness of regulatory governance within the Public Utilities Regulatory Commission (PURC) has long been scrutinised and debated. A recent in-depth study sheds light on the strengths and challenges of PURC’s oversight of Ghana’s electricity and urban water sectors, providing critical insights into its regulatory autonomy, transparency, responsiveness and credibility.

Assessing PURC’s Regulatory Framework

The study conducted a comprehensive qualitative analysis of PURC’s governance structures, examining whether its institutional design and legal framework align with globally recognized features of effective regulatory governance. The key focus areas included PURC’s autonomy and transparency, its responsiveness to stakeholders, and its perceived level of regulatory credibility within the electricity and urban water sectors.

The study gathered data through one-on-one interviews, focus group discussions, and document analysis using a qualitative research methodology. The research was conducted across three strategically selected regions: Accra (Southern belt), Kumasi (Middle belt) and Tamale (Northern belt), ensuring a geographically representative perspective.

Findings

The findings highlight that PURC exhibits commendable managerial, legal and financial autonomy. However, challenges persist in ensuring complete structural autonomy, leaving the Commission vulnerable to political interference. While mechanisms exist to enhance transparency, there remain significant areas for improvement. For instance, the study found limited transparency in the tariff calculation model, as the unpredictability of certain variables creates uncertainty among stakeholders.

Despite these challenges, PURC has demonstrated regulatory responsiveness and credibility. However, inconsistencies in policy implementation and decision-making need urgent attention. A notable concern is the lack of predictability in tariff adjustment schedules, which affects both consumers and service providers.

The study identifies several key challenges that hinder PURC’s effectiveness:

• Weak structural autonomy (Transitional gap, appointment process, etc.)
• Political interference in Tariff decision-making
• Insufficient safeguard mechanisms to ensure full regulatory autonomy
• Threats to financial independence, making the Commission susceptible to external influences
• Environmental factors impacting regulatory decisions
• Inadequate institutional resources for effective oversight

Recommendations

To address these challenges, the study proposes several reforms to strengthen the PURC’s regulatory governance:

1. Enhancing Autonomy and Transparency: The appointment procedures and tenure of office for PURC Officials should be reinforced to insulate the Commission from political influence.
2. Implementing the Cash Waterfall Mechanism (CWM): A more transparent tariff-setting process can be achieved by ensuring that all revenue allocations follow a well-defined and predictable system.
3. Strengthening Enforcement Mechanisms: More stringent regulatory frameworks should be put in place to ensure compliance by utility service providers.
4. Facilitating National Dialogue: A structured engagement with stakeholders is needed to balance consumer protection with fair tariffs for utility providers, ensuring sustainable infrastructure investment.
5. Addressing Policy Inconsistencies: The regulatory framework should prioritize consistency in policies to enhance credibility and predictability in tariff adjustments.

Theoretical Underpinnings

The research findings support three established theories of regulation:

• Public Interest Theory: Suggests that regulation exists to protect public welfare and ensure that essential services are accessible and affordable.
• Capture Theory: Highlights the risk of regulators being influenced by industry players or political actors, leading to decisions that may favor private over public interests.
• Credible Commitment Theory: Underlines the importance of regulatory bodies maintaining a consistent and transparent governance structure to build trust among stakeholders.

Future Research

The study paves the way for future research in regulatory governance, suggesting areas that need further exploration, such as:

• Measuring the quality of PURC’s regulatory governance to assess how effectively it balances stakeholder interests.
• Investigating political interference in PURC’s operations, determining whether motivations are based on public or private interests.
• Examining regulatory non-compliance by public utilities in the electricity and water sectors.
• Analyzing power dynamics within the governance structures of the utility sector.
• Comparative and longitudinal studies to track regulatory reforms over time and across different jurisdictions.

Furthermore, exploring the relationship between regulatory credibility, stakeholder behaviour, and policy outcomes will provide deeper insights into improving governance in Ghana’s utility sectors. The study also calls for a critical evaluation of government interference and its implications for service delivery.

A Call for Stronger Governance

The study makes original contributions to knowledge by highlighting key regulatory governance issues in Ghana’s electricity and urban water sectors. It underscores the need for institutional and legal reforms to strengthen regulatory autonomy, transparency and credibility. As Ghana continues to develop its infrastructure, ensuring an independent and effective PURC remains crucial in balancing consumer interests with sustainable utility service provision. With targeted reforms and continued dialogue, Ghana can enhance the efficiency and integrity of its regulatory governance, ultimately fostering a more robust and accountable public utilities sector.

By: Robert Tia Abdulai Aziz (Ph.D)

Regulatory Governance, Regulation and Public Policy Expert