The Africa Sustainable Energy Centre (ASEC) has conducted a critical review of Ghana’s energy sector in light of the 2025 Budget presented by Finance Minister, Dr. Cassiel Ato Forson, raising concerns over financial shortfalls, crippling debts, and structural inefficiencies threatening the country’s energy stability and economic growth.

According to ASEC, Ghana’s energy sector is under severe financial strain, with government spending on energy ballooning to GH¢20.8 billion in 2024.

They noted that despite efforts to stabilise the sector, the financing gap for 2025 is projected at GH¢35 billion, with an estimated total shortfall of GH¢140 billion from 2023 to 2026. ASEC warned that this unsustainable trajectory is diverting critical funds away from infrastructure and social services.

ASEC highlighted that the financial distress extends to Independent Power Producers (IPPs), to whom Ghana owes US$1.73 billion. They cautioned that the lack of a clear payment plan raises concerns over electricity reliability, as IPPs may be forced to cut back on power generation, exacerbating frequent outages and disrupting businesses.

Additionally, ASEC pointed out that the Electricity Company of Ghana (ECG) is facing its own financial crisis, with debts reaching GH¢68 billion. The centre attributed ECG’s liquidity issues to inefficiencies in revenue collection, poor metering systems, and electricity theft, which continue to undermine efforts to sustain power supply.

In its assessment of the 2025 Budget’s proposed solutions, ASEC noted that the government aims to renegotiate IPP contracts to reduce capacity charges, review the Energy Sector Levies Act (ESLA) to consolidate key levies, and implement tariff adjustments to reflect inflation and operational costs.

To cut fuel costs, ASEC acknowledged that the government plans to increase natural gas supply from 60 mmsc per day to 100 mmsc per day, reducing reliance on expensive liquid fuels. They also welcomed initiatives to deploy smart metering systems and enhance revenue collection strategies to curb energy losses and improve financial performance.

Despite these interventions, ASEC warned that over-reliance on tariff hikes could place undue financial pressure on consumers, affecting industrial competitiveness and household affordability. They urged the government to aggressively pursue alternative revenue sources, including Public-Private Partnerships (PPPs) and private-sector investments.

ASEC further stressed that debt restructuring remains a crucial priority, urging the government to establish a structured repayment plan for IPPs and work with financial institutions to ease fiscal pressure. They also called for structural reforms in ECG, including potential privatisation or corporate restructuring to enhance operational efficiency.

ASEC expressed concern that while the budget acknowledges the importance of renewable energy, it lacks a concrete implementation roadmap. They recommended setting clear renewable energy targets, such as achieving 30% electricity generation from renewables by 2035, while investing in large-scale solar, wind, and hydropower projects.

“The government must act now to secure Ghana’s energy future. Tariff adjustments alone cannot solve the crisis—we need structural reforms, debt restructuring, and sustainable energy investments,” ASEC stated in its review.

ASEC concluded that addressing Ghana’s energy crisis requires a multi-faceted approach, combining financial prudence, governance reforms, and strategic investment in renewables. Without swift and decisive action, the nation risks prolonged power instability, economic setbacks, and hindered industrialisation.

The coming months, ASEC emphasised, will be critical in determining whether Ghana can navigate its energy challenges and build a resilient, financially stable power sector for future generations.