Ghana’s energy sector debt could hit $12.5 billion by 2023 if distribution losses and failure on the part of the Electricity Company of Ghana to collect all tariffs fail.

Presently, the ECG is not able to collect about 14% of electricity supplied to consumers.

Minister designate for Energy, Dr. Mattew Opoku Prempeh told Parliament's Appointment Committee that if concrete steps are not taken to improve the collection of electricity tariffs and reduce the losses, the energy situation will become precarious.

 “We don’t collect enough revenue to meet our requirements. “We’re going to sit down with all the players and let them understand that if we don’t change and agree on some parameters we’ll all collapse.”

According to him, he will seek relief through ongoing renegotiation of power contracts with Independent Power Producers and also consider a different approach to privatizing the ECG after government failed to privatize it in 2019 despite having the support of the Millennium Challenge Account programme.

Since the renegotiation of the power deals began in 2019, three of the 12 IPPs have agreed to cut their tariffs charged to the government. Nevertheless, none have agreed to stop charging the government for energy it does not consume. This power cost the nation $500 million every year.

Government established ESLA to clear energy sector debt

The government in 2017 established the Energy Sector Support Levy.

It was set up as a special-purpose vehicle mandated to raise money to clear outstanding energy sector debts.

In 2017, it was set out to raise GH¢6 billion for the first tranche of the GH¢10 billion debt.

The managers of the transaction eventually raised some GH¢4.7 billion.