Ghana’s energy sector stands at a critical crossroads. Years of accumulating debt, under-recovery of costs, and the mounting cost of fuel procurement have created a fiscal and operational emergency that threatens the stability of the national electricity supply. The current energy sector indebtedness, exceeding $3.1 billion, combined with unmet obligations to Independent Power Producers (IPPs), fuel suppliers, and guarantee institutions, has placed an unsustainable burden on the public purse. Left unaddressed, these challenges could precipitate a full-blown power crisis with dire consequences for businesses, households, and economic growth.

In view of this, government is taking decisive action to safeguard the integrity of the power sector and ensure uninterrupted supply. The proposed Energy Sector Levies (Amendment) Bill, 2025, seeks to revise the Energy Sector Shortfall and Debt Repayment Levy to mobilise critical resources for settling outstanding obligations, restoring essential guarantees, and funding the procurement of liquid fuel for power generation.

Importantly, the proposed adjustments have been carefully calibrated to avoid increases in pump prices of petrol and diesel, and will be implemented in a manner that protects industry and households from further economic strain. The proceeds will be ring-fenced to serve as a dedicated funding stream for stabilising the power sector and preventing further accumulation of debt.

This amendment is both urgent and necessary to preserve Ghana’s energy security, enhance investor confidence in the sector, and support sustainable growth. The memorandum that follows outlines the rationale, implications, and strategic intent behind the proposed legislative amendment.

Read the full Memo below;

ENERGY SECTOR LEVIES (AMENDMENT) BILL, 2025

MEMORANDUM

The object of the Bill is to amend the Energy Sector Levies Act, 2025 (Act 1135) to increase the rate of the Energy Sector Shortfall and Debt Repayment Levy in order to raise additional revenue to support the payment of energy sector shortfalls, reduce energy sector legacy debts and stabilise power supply.

The power sector is the biggest economic and fiscal risk presently faced by the country.

This could lead to major crises if it is not addressed. The challenges in the energy sector are quite enormous, emanating from debt, shortfalls, insufficient gas supply and inefficiencies.

The total energy sector debt as at the end of March 2025 stands at three point one billion United States Dollars. The debt includes money owed to independent power producers, State Owned Enterprises and fuel suppliers.

Due to non-payment of bills owed to ENI and Karpower, the World Bank International Development Association guarantee of five hundred and twelve million United States Dollars and the Ghana National Petroleum Corporation guarantee of one hundred and twenty million United States Dollars were completely drawn down.

As a result of this, the Government is required to find an additional amount of six hundred and thirty-two million United States Dollars to restore these guarantees. In addition to the above, a minimum of three point seven billion United States Dollars is also needed to clean up the overall energy sector indebtedness.

Furthermore, the electricity sector of the country has experienced a significant shift over the years, with the country now heavily reliant on thermal power generation to supplement hydroelectric sources.

The cost of liquid fuel to power the thermal power generation plants is not included in the current electricity tariff build-up, resulting in a significant revenue shortfall for the procurement of liquid fuel.

According to the Public Utilities Regulatory Commission, the inclusion of the cost of liquid fuel in the price build will lead to an increase in electricity tariffs by over fifty per cent. Government considers that this increment will have a higher negative impact on industry and household incomes.

Government will, therefore, require one point two billion United States Dollars in 2025 to procure liquid fuel for power generation alone.

The power sector risks imminent collapse if these unsustainable shortfalls are not resolved, particularly given that the fiscal policy cannot accommodate the financial needs of the sector.

To help raise additional revenue to fund the needs in the power sector, government is proposing an increase in the Energy Sector Shortfall and Debt Repayment Levy.

The impact will be absorbed by the gains made from the strong performance of the Cedi. With this increment, there will be no increase in the ex-pump price of petrol and diesel in the next pricing window beginning today if the levy is increased.

The levy will serve as a dedicated source of funding to the energy sector, and the proceeds will be earmarked for the procurement of liquid fuel for power generation, given that the current electricity tariff paid by consumers does not include the cost of fuel used for power generation.

The decision to increase the levy on petroleum prices is based on the need to find a balance between ensuring a stable power supply while promoting the financial sustainability of the sector.

The Bill thus seeks to amend the Schedule to Act 1135 to increase the Energy Sector Shortfall and Debt Repayment Levy to augment the Energy Sector Support Account and ensure the availability of fuel for backup generation.