The African Sustainable Energy Centre (ASEC) has proposed measures aimed to enhance the efficiency of the energy sector, reduce dependence on costly fuel imports, and encourage private sector investment, while supporting Ghana’s energy transition goals.
The energy sector is a cornerstone of the country’s economic development, and addressing its challenges is crucial for continued industrialization and social well-being.
One of the primary recommendations from ASEC is the implementation of a comprehensive debt restructuring plan for the energy sector. Ghana’s energy sector is facing significant financial stress, with the government spending GH¢20.8 billion in 2024 to support it.
“The government should work with financial institutions to restructure the energy sector’s debts, providing a clear repayment framework that balances affordability with fiscal responsibility.”
African Sustainable Energy Centre (ASEC)
The financing gap for the 2025 fiscal year is projected to reach GH¢35 billion, exacerbating Ghana’s fiscal challenges.
The need for improved governance and transparency within the energy sector is another key recommendation from ASEC. With the energy sector facing serious financial pressure, it is essential to ensure that funds allocated for reforms are being used effectively.
“The government must conduct regular independent audits of the energy sector to ensure funds allocated for energy reforms are used effectively.
“Establish an Energy Sector Financial Oversight Committee to monitor how revenues are collected and utilized.”
African Sustainable Energy Centre (ASEC)
Dr. Cassiel Ato Forson, Ghana’s Minister for Finance, highlighted in the 2025 Budget that the government is working to implement new measures to improve the sector’s financial management.
However, ASEC stressed that these measures need to be implemented in a way that strengthens transparency and builds public trust in the energy sector’s financial operations.
Another important recommendation from ASEC is to encourage private sector investment in the energy sector.
“The government should introduce tax incentives and attractive investment conditions to encourage private sector participation in renewable energy projects and power distribution services.”
African Sustainable Energy Centre (ASEC)
Private sector involvement is crucial to the expansion of renewable energy projects, such as solar and wind power, and it can provide the much-needed capital and innovation to address Ghana’s energy needs.
Dr. Forson noted that while the 2025 budget acknowledges the importance of renewable energy, it lacks detailed strategies to scale up investments in this area.
ASEC’s proposal suggests that by offering clear incentives, the government can attract foreign and local investors, reducing the burden on public finances.
Strengthening Energy Efficiency Policies
In addition to increasing renewable energy generation, ASEC stressed the importance of improving energy efficiency.
“Introduce policies that encourage energy conservation, such as energy-efficient appliances, smart grid technologies, and industrial efficiency programs.
“Implement energy efficiency audits in industries and public institutions to reduce electricity wastage.”
African Sustainable Energy Centre (ASEC)
One of the key inefficiencies in the energy sector is the poor metering and billing systems, particularly with the Electricity Company of Ghana (ECG) and Northern Electricity Distribution Company (NEDCo).
These inefficiencies, along with technical losses and electricity theft, have contributed to the financial strain on the energy sector.
ASEC called for a more robust approach to metering systems and revenue collection, ensuring that the sector becomes more self-sustaining and less reliant on government support.
Accelerating the adoption of renewable energy is central to ensuring the sustainability of Ghana’s energy future.
ASEC recommended that the Ministry of Energy set a target for renewable energy adoption, such as achieving 30% of electricity generation from renewables by 2035.
This would involve the development of large-scale solar power farms and mini-grid solutions in rural areas to reduce dependency on thermal power plants.
In the 2025 budget, Dr. Forson acknowledged the importance of renewable energy but stressed that its adoption has been slower than expected.
As ASEC pointed out, a clearer roadmap for increasing renewable energy share is critical to achieving energy security. Expanding renewable energy projects will also help reduce Ghana’s dependence on fossil fuels, which have volatile prices and contribute to climate change.
The 2025 Budget outlines several initiatives to stabilize the energy sector, including renegotiating IPP contracts to reduce operational costs and implementing tariff adjustments to align electricity prices with inflation and energy generation costs.
These adjustments aim to make electricity tariffs more affordable and ensure cost recovery for power producers.
However, ASEC warned “frequent price hikes could burden businesses and households, potentially reducing demand for electricity and creating public dissatisfaction.”
The 2025 Budget acknowledges Ghana’s energy crisis and presents bold interventions to address financial shortfalls and inefficiencies. However, concerns remain regarding tariff adjustments, slow renewable energy adoption, and ECG’s financial struggles.
By implementing a structured debt restructuring plan, enhancing transparency, promoting private sector engagement, and accelerating renewable energy investments, Ghana can stabilize its energy sector and create a resilient, sustainable, and economically viable energy market.
The success of these initiatives will determine Ghana’s ability to navigate its current energy challenges while securing a reliable energy future for industries, businesses, and households.
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