Determinants of access to electricity in Ghana: the role of petroleum products prices

Abstract

This study probes the intricate interplay between petroleum product prices and access to electricity in Ghana, alongside other critical determinants, including electricity prices, GDP per capita, rural population growth, and foreign direct investment. Spanning the years 2000 to 2022, the research employs robust correlation and regression analyses to uncover significant relationships among these socioeconomic variables. The findings reveal compelling evidence that prices of petroleum products have substantial effects on electricity access, primarily through their impact on operational costs, and that rising prices of diesel have more negative impacts than corresponding rising petrol prices. Also, increased GDP per capita and electricity prices positively affect improved electricity access, suggesting that economic growth and revenue generation are key to expanding access. However, the effects of rural population growth and foreign direct investments on electricity access were insignificant, although the constructs were statistically significantly correlated. The findings highlight the importance of stabilizing petroleum product prices and improving economic conditions to enhance electricity access. Additionally, prioritizing investments in rural electrification and infrastructure development is crucial to accommodate the growing rural population. This study fills a gap in the literature by providing empirical evidence on the determinants of electricity access in Ghana, with a novel focus on petroleum product prices. Aside from the theoretical implications of this research, its recommendations aim to inform policymakers and stakeholders in their efforts to achieve universal electricity access, aligned with the seventh Sustainable Development Goal.