By: Deborah Pofara Luu
Finance Minister Dr. Cassiel Ato Forson has issued a warning that Ghana’s energy sector is on the verge of a financial crisis, with cumulative shortfalls expected to exceed $9 billion by 2026 if immediate reforms are not implemented. Speaking at the National Economic Dialogue (NED) 2025, Dr. Forson described the power sector as highly inefficient and burdened by rising operational costs and debt.
Dr. Forson highlighted the Electricity Company of Ghana (ECG) as a major area of concern, noting that it collects only 62% of the energy it purchases, with a significant portion of its revenue spent on non-essential expenditures. He revealed that in 2024, the energy sector recorded a $2.2 billion shortfall, despite government transfers of $2.1 billion between 2023 and 2024 aimed at stabilizing the industry.
According to the Minister, unpaid legacy arrears in the energy sector stood at $1.3 billion at the end of 2022, with annual cumulative sector shortfalls reaching $2.2 billion in 2024, despite substantial government transfers.
In the 2025 budget statement presented to Parliament on March 11, 2025, Dr. Ato Forson indicated that in 2024, the Ministry of Finance (MoF) supported the energy sector with payments of approximately GH¢20.8 billion. He suggested that these funds could have been allocated to job creation and development programmes, such as road construction, schools, and hospitals, had the energy sector’s inefficiencies been addressed.
To tackle these challenges, the 2025 Energy Sector Recovery Programme interventions will be implemented to address the energy sector challenges. These include measures such as improving collection efficiency for ECG and NEDCo, implementing a liquid Fuel-to-Gas swap, and completing IPP capacity renegotiations to generate savings.
According to Dr. Forson, “Fixing the sector requires bold measures,” emphasizing the need for reforms in tariff structures, improved revenue collection, and increased investment in renewable energy to ensure the sector’s financial sustainability.
