The Africa Sustainable Energy Centre (ASEC) has raised serious concerns about the state of the country’s energy sector following a review of the 2025 Budget presented by the Minister of Finance Dr. Cassiel Ato Forson on March 11, 2025.

According to ASEC’s Executive Director, Justice Ohene-Akoto, the think tank’s post-budget review has revealed severe financial shortfalls, escalating debt, and systemic inefficiencies that threaten both energy security and broader economic stability.

It pointed out that the government's expenditure on the energy sector reached GH¢20.8 billion in 2024, yet industry experts argue that it has done little to resolve the sector’s many challenges.

The think-tank also noted that the financing gap for 2025 is projected to widen further to GH¢35 billion, while from 2023 to 2026, the country faces a cumulative energy sector shortfall estimated at GH¢140 billion.

ASEC warns that this unsustainable fiscal trajectory is diverting critical resources away from infrastructure development and essential social services.

"For instance, the government’s indebtedness to independent power producers (IPPs) currently stands at US$1.73 billion, with no clear repayment plan in sight. This uncertainty raises serious concerns about the continuity of power supply, as IPPs may be forced to scale back generation—worsening already frequent outages and disrupting business operations," Ohene-Akoto said.

The Electricity Company of Ghana (ECG), a state utility, is also facing acute financial difficulties, with debts now at GH¢68 billion.

Challenges such as inefficient revenue collection systems, widespread electricity theft, and outdated metering infrastructure have compounded ECG’s liquidity constraints, further threatening the sustainability of power distribution.

The 2025 Budget proposes several measures to address these challenges. Key interventions include;

Reviewing the Energy Sector Levies Act (ESLA) to consolidate energy levies and implementing tariff adjustments that reflect inflationary pressures and operational costs.

To reduce the high costs associated with liquid fuel imports, the government also plans to increase domestic natural gas supply from 60 million standard cubic feet per day (mmscfd) to 100 mmscfd.

Additionally, smart metering systems and enhanced revenue collection strategies are expected to help reduce energy losses and improve the sector’s financial performance.

While acknowledging these measures, ASEC’s Executive Director cautioned that an over-reliance on tariff increases risks placing a heavy financial burden on both households and industries, potentially eroding competitiveness and affordability.

Instead, he advocates a more diversified approach, urging the government to pursue alternative revenue sources through public-private partnerships (PPPs) and increased private sector participation in the energy value chain.

ASEC also emphasises the need for urgent debt restructuring. The think tank recommends that the government establish a clear repayment plan for IPPs and collaborate with financial institutions to ease fiscal pressures.

To address ECG’s operational inefficiencies, ASEC calls for forward-looking structural reforms including the possibility of partial privatization or corporate restructuring to improve governance and operational performance.

Notably absent from the government’s strategy, according to ASEC, is a concrete roadmap for renewable energy development. The center urges policymakers to set clear targets, such as achieving 30% of electricity generation from renewable sources by 2035, and to invest in large-scale solar, wind, and hydro-power projects to diversify the country’s energy mix and strengthen long-term resilience.

ASEC’s review concludes that addressing Ghana’s energy crisis will require a multi-pronged strategy, combining fiscal discipline, robust governance reforms, and strategic investments in renewable energy.

It further warns that without immediate action, the country risks enduring prolonged power instability, economic setbacks, and stalled industrial growth.

“Government must act now to secure Ghana’s energy future. Tariff adjustments alone cannot resolve the crisis, what is needed are structural reforms, debt restructuring, and sustainable energy investments” ASEC emphasised.

“The coming months will be critical in determining whether Ghana can chart a sustainable path out of its energy sector crisis and build a resilient, financially stable power sector capable of supporting industrialization and economic growth for generations to come,” Ohene-Akoto concluded.

SP/MA

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