Urgent Reforms Needed to Address Ghana’s Energy Shortfall
Ghana’s energy sector, identified as the biggest economic risk by Finance Minister Dr Cassiel Ato Forson, is grappling with a $2 billion financial shortfall. This deficit surpasses the nation’s domestic capital expenditure, highlighting the sector’s critical state. During a session on the Ghana Energy Compact at the World Bank in Washington, Dr Forson stressed the need for comprehensive reforms.
The inefficiencies within the energy value chain, particularly in distribution, are leading to high tariffs impacting ordinary Ghanaians. Dr Forson acknowledged that addressing these inefficiencies, especially by the Electricity Company of Ghana (ECG), could significantly reduce the sector’s shortfall.
To tackle the financial crisis, the government has approved private sector participation, and has submitted the Legislative Instrument to Parliament to allow competitive procurement for power plants. These actions are seen as vital steps toward bringing transparency and sustainability to the energy sector.
The Energy Compact is viewed as a timely intervention, with the potential for lasting impact. Dr Forson emphasized the urgency of action, expressing hope that the process would proceed without delays to benefit the economy and improve citizens’ well-being.
During a deep-dive session on the Ghana Energy Compact under Mission 300 at the WorldBank Yesterday, I reiterated that Ghana’s energy sector is currently the biggest economic risk we face.
— Cassiel Ato Forson(PhD) (@Cassielforson) April 23, 2025
The sector is burdened with a financial shortfall of approximately $2 billion. This amount… pic.twitter.com/czW9Ypds8Y
As Ghana navigates these challenges, the new National Democratic Congress (NDC) administration, led by President John Dramani Mahama, is making strides in economic recovery. The government recently secured a staff-level agreement with the IMF, reflecting international confidence in its direction and commitment to structural reforms.
Source: 3News