Ghana’s energy sector faces a critical moment as escalating debts, gas supply shortages, and inefficiencies threaten economic stability, industrial productivity, and job creation.
The Africa Sustainable Energy Centre (ASEC) has outlined key recommendations to avert a looming crisis and chart a sustainable path forward.
Dr. Elvis Twumasi, Director of Research and Innovation at ASEC, warned that without immediate interventions, the sector’s woes would deepen, undermining national development goals.
“Ghana’s energy crisis is not just a technical issue; it’s a governance and financial crisis. Resolving these challenges is essential for sustainable economic growth.
“Despite initiatives like the Cash Waterfall Mechanism (CWM), systemic mismanagement has exacerbated financial burdens, strained relationships with Independent Power Producers (IPPs), and resulted in ongoing power rationing.”
Dr. Elvis Twumasi, Director of Research and Innovation at ASEC
ASEC emphasized that the energy sector’s troubles have persisted due to inadequate gas infrastructure, financial mismanagement, and inefficiencies within the Electricity Company of Ghana (ECG).
The sector’s debts, estimated at $2.5 billion by the end of 2024, continue to grow, partly due to high commercial losses and reliance on expensive thermal generation. Additionally, the delayed expansion of critical gas infrastructure has left Ghana vulnerable to energy supply disruptions.
Key Recommendations by ASEC
To address these challenges, ASEC has proposed a series of actionable reforms aimed at ensuring transparency, efficiency, and sustainability in the energy sector.
“Government must ensure the completion of Train Two of the Atuabo Gas Plant to increase the national capacity to 450 MMscfd, and complete the Liquefied Natural Gas (LNG) facility at Tema.
“The new administration must build the Takoradi-to-Tema (TT) gas pipeline to ensure energy availability during disruptions in the West African Gas Pipeline (WAGP).”
Dr. Elvis Twumasi, Director of Research and Innovation at ASEC
ASEC emphasized that these projects must be implemented with transparency and accountability to attract investor confidence and ensure efficient execution.
ASEC reiterated its call for the privatization of the commercial leg of the Electricity Company of Ghana (ECG) to enhance revenue mobilization and operational efficiency.
Dr. Twumasi highlighted that past privatization efforts failed due to poor planning and lack of transparency. ASEC recommended adopting a framework informed by the Millennium Development Authority (MiDA) to ensure success.
“Properly allocate the $650 million generated annually by the Energy Sector Recovery Levy (ESLA).
“Publishing detailed reports on fund usage will foster trust and attract key investments, such as the $316 million Ghana Power Compact from the Millennium Challenge Corporation (MCC).”
Dr. Elvis Twumasi, Director of Research and Innovation at ASEC
ASEC called for a review of electricity tariffs to align them with actual consumption patterns and operational costs.
This will ensure financial stability for utility companies while protecting vulnerable customers through subsidies.
“Accelerate the deregulation of the electricity market and renegotiate agreements with IPPs to balance national interests with economic stability. This would foster competitive and transparent operations.”
Dr. Elvis Twumasi, Director of Research and Innovation at ASEC
Ghana’s renewable energy targets require significant investment in solar and wind energy. The ASEC urged the government to incentivize private sector participation and expand infrastructure to integrate renewable energy sources into the national grid.
ASEC also advocated for nuclear power as a reliable baseload energy source. Small modular reactors, with their high-capacity factor and scalability, are identified as an ideal solution to Ghana’s energy needs while supporting decarbonization efforts.
While Ghana has made strides in introducing prepaid and smart meters, challenges such as tampering, inadequate rural coverage, and aging infrastructure persist.
ASEC emphasized the need to replace outdated meters to reduce revenue losses and improve electricity distribution efficiency.
Call to Action
Dr. Twumasi urged the government to move beyond political rhetoric and prioritize the recommended reforms.
“The energy sector’s challenges require bold, decisive action. Addressing these issues will ensure economic resilience, protect jobs, and secure Ghana’s energy future.”
Dr. Elvis Twumasi, Director of Research and Innovation at ASEC
He stressed that resolving the sector’s financial inefficiencies and infrastructure deficits would solidify the government’s legacy as a transformative force in Ghana’s history.
Ghana’s energy sector remains at a critical crossroads, with escalating debts and inefficiencies threatening national stability. ASEC’s comprehensive roadmap offers practical solutions to address these challenges and unlock the sector’s potential as a driver of economic growth. However, achieving this vision will require political will, transparency, and collaboration among stakeholders.
As Ghana navigates this pivotal moment, implementing these reforms will not only secure reliable energy supply but also pave the way for a sustainable and prosperous future.
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