Finance Minister, Ken Ofori Atta, has indicated that the energy sector will undergo some vigorous reforms to save the sector from collapsing.

This comes after the sector’s legacy debt reached about $2 billion as of the end of May 2023. The legacy debt is the non-payment of interest and principal on an energy bond issued by the Government of Ghana in 2019.

According to Mr. Ofori-Atta, these reforms will sustainably reduce the debt in the energy sector.

Furthermore, he said, the expected structural reforms in the sector should reduce the shortfall or debt by at least $2.95 billion over the period. This debt includes non-payment for power produced by Independent Power Producers on take or pay basis, power produced by the Volta River Authority, supply of lean gas by Ghana National Gas Company, amongst others.

“With legacy debt in the Energy Sector reaching about $2 billion as of the end of May 2023, and an estimated shortfall of $5.9 billion between 2023 and 2025, due to the current conditions of SOEs [State Owned Enterprises] and IPPs in the value chain in the sector, the sector has been prioritised for comprehensive reforms. It is expected that structural reforms in the sector should reduce the shortfall by at least $2.95 billion over the period”.

“These reforms, which are aimed at sustainably reducing losses in the energy sector, will be outlined in the updated Energy Sector Recovery Plan (ESRP)”, he explained.

Mr. Ofori Atta stressed that the updated Energy Sector Recovery Plan (ESRP) will be approved by Cabinet by the end of June 2023.

He opined that it will be accompanied by the operationalisation of a framework to guide the granting of energy sector subsidies by the end of June 2023.

He furthered that an implementation of an inter-utility debt settlement framework on a quarterly basis will start in June 2023.

The implementation of a mechanism to enforce the guidelines of the Cash Waterfall Mechanism (CWM) and Natural Gas Clearinghouse (NGC) will also start by end the of June 2023.