The Africa Sustainable Energy Centre (ASEC) has raised serious concerns over the state of the country’s energy sector, following a review of the 2025 Budget presented by Finance Minister Dr. Cassiel Ato Forson.
The think-tank’s post-budget review revealed severe financial shortfalls, escalating debts and systemic inefficiencies that threaten the country’s energy security and broader economic stability, said ASEC’s Executive Director, Justice Ohene-Akoto.
Ballooning debt and financial strain
Government expenditure on the energy sector reached GH¢20.8billion in 2024, which industry experts said did very little to quell the sector’s many challenges.
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 GH¢140billion, says ASEC.
ASEC warns that this unsustainable fiscal trajectory is diverting critical resources away from infrastructure development and essential social services.
For instance, government’s indebtedness to independent power producers (IPPs) currently stands at US$1.73billion, with no clear repayment plan in sight.
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), a state utility, is also facing acute financial difficulties with debts now at GH¢68billion. Challenges such as inefficient revenue collection systems, widespread electricity theft and outdated metring infrastructure have compounded ECG’s liquidity constraints, further threatening the sustainability of power distribution.
Interventions in the 2025 budget
The 2025 Budget proposes several measures to address these challenges. Key interventions include renegotiating IPP contracts to reduce capacity charges, reviewing the Energy Sector Levies Act (ESLA) to consolidate energy levies and implementing tariff adjustments that reflect inflationary pressures and operational costs.
Meanwhile, to reduce the high costs associated with liquid fuel imports, government plans to increase domestic natural gas supply from 60 million standard cubic feet per day (mmscfd) to 100 mmscfd.
In addition, smart metering systems and enhanced revenue collection strategies are expected to help reduce energy losses and improve financial performance within the sector.
ASEC’s recommendations
While acknowledging these measures, ASEC’s Executive Director cautions that over-reliance on tariff increases risks placing a heavy financial burden on both households and industries, potentially eroding competitiveness and affordability.
Instead, he is advocating a more diversified approach – calling on government to pursue alternative revenue sources through public-private partnerships (PPPs) and increased private sector participation in the energy value chain.
ASEC also promoted the idea of urgent debt restructuring. The centre recommends that government establish a clear repayment plan for IPPs and collaborate with financial institutions to ease fiscal pressures.
On ECG’s operational inefficiencies, ASEC called for forward-looking structural reforms – including the possibility of partial privatisation or corporate restructuring – to drive improved governance and operational performance.
Notably absent from government’s strategy, according to ASEC, is a concrete roadmap for renewable energy development. The centre is urging policy-makers to set clear targets – such as achieving 30 percent of electricity generation from renewable sources by 2035 – and invest in large-scale solar, wind and hydropower 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 investment in renewable energy.
It further warned 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 prove 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 industrialisation and economic growth for generations to come,” Mr. Ohene-Akoto concluded.
