The Africa Sustainable Energy Centre (ASEC) has expressed significant worries about the nation's energy sector after reviewing the 2025 budget submitted by Finance Minister Dr. Cassiel Ato Forson.
The analysis from the think tank following the budget announcement highlighted significant financial deficits, mounting debt, and deep-seated operational issues that jeopardize the nation's energy safety as well as overall economic steadiness, according to Justice Ohene-Akoto, who serves as the Executive Director of ASEC.
Rising debts and monetary pressures
The government spent GH₵20.8 billion on the energy sector in 2024, but according to industry professionals, this investment failed to significantly address the numerous issues plaguing the sector.
The financing gap for 2025 is projected to widen further to GH¢35billion. And from 2023 to 2026, the country faces a cumulative energy sector shortfall estimated at\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0 GH¢140billion, says ASEC.
The ASEC cautions that this fiscally unsustainable path is redirecting vital funds away from infrastructure projects and crucial social services.
For example, the government owes independent power producers (IPPs) approximately $1.73 billion, and there is no evident strategy for repaying this amount.
This uncertainty raises serious concerns over the continuity of power supply as IPPs could scale back generation, worsening already frequent outages and disrupting business operations, added Mr. Ohene-Akoto, an engineer by training.
The Electricity Company of Ghana (ECG), which is owned by the government, is grappling with severe financial issues, accumulating debts amounting to GH₵68 billion. Various problems like ineffective billing mechanisms, pervasive electricity theft, and obsolete metering equipment have exacerbated ECG's cash flow challenges, posing a significant risk to the reliability of power supply services.
Interventions within the 2025 budget
The 2025 budget outlines multiple strategies to tackle these issues. Significant actions encompass revising Independent Power Producers (IPP) agreements to lower capacity fees, reassessing the Energy Sector Levies Act (ESLA) for harmonizing energy taxes, and adjusting tariffs to account for rising prices and operating expenses.
In an effort to lower the significant expenses tied to importing liquid fuels, the administration aims to boost local natural gas production from 60 million standard cubic feet per day (mmscfd) to 100 mmscfd.
Furthermore, the implementation of intelligent metering systems along with advanced revenue collection methods is anticipated to aid in decreasing energy losses and boosting financial outcomes within the industry.
ASEC’s recommendations
Even as recognizing these steps, the Executive Director of ASEC warns that depending too heavily on raising tariffs could impose significant financial strain on both families and businesses, which might undermine their competitive edge and affordability.
Rather than focusing solely on one method, he is promoting a varied strategy—urging the government to seek additional revenue streams via public-private partnerships (PPPs) and greater involvement of the private sector in the energy supply chain.
ASEC additionally advocated for swift debt restructuring. It suggests that the government create a transparent payment strategy for Independent Power Producers (IPPs) and work alongside financial institutions to alleviate budgetary strain.
Regarding ECG’s operational inefficiencies, ASEC advocated for forward-thinking structural changes — such as potential partial privatization or corporate restructuring — aimed at enhancing governance and boosting operational efficiency.
According to ASEC, one key element missing from the government’s plan is a detailed pathway for advancing renewable energy. The center is pressing policymakers to establish specific goals—like generating 30% of electrical power from renewables by 2035—and to commit resources toward extensive solar, wind, and hydroelectric initiatives. This approach aims at broadening the nation's energy portfolio and enhancing enduring stability.
The assessment by ASEC indicates that tackling Ghana's energy crisis necessitates a comprehensive approach encompassing budgetary restraint, stringent governance improvements, and targeted investments in sustainable power sources.
The warning went further, stating that without prompt intervention, the nation faces extended periods of electrical grid instability, financial reversals, and halted progress in industrial development.
"The government needs to take action immediately to ensure Ghana’s energy security. Simply adjusting tariffs will not be enough to solve this crisis; instead, we require fundamental reforms, debt restructuring, and investments in sustainable energy," emphasized ASEC.
"The upcoming months will be crucial in deciding whether Ghana can navigate a sustainable way out of its energy sector crisis and establish a robust, economically sound power system able to foster industrialization and drive economic expansion for future generations," Mr. Ohene-Akoto stated at last.
Provided by Syndigate Media Inc. ( Syndigate.info ).
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