Ghana’s energy sector is facing substantial fiscal risks due to increasing financing shortfalls. In 2024, the Ministry of Finance (MoF) provided approximately GH¢20.8 billion to support the energy sector. However, these funds could have been utilized for job creation, infrastructure development, and social programs if the sector’s inefficiencies were addressed.
A recent analysis by the energy sector financing modeling team revealed that the Business as Usual (BAU) energy sector financing shortfall has surged to around GH¢35 billion for 2025. This is a significant increase from the previous year, despite substantial spending to address the shortfall. Moreover, the estimated shortfall for the period 2023-2026 stands at approximately GH¢140 billion, exceeding 20 times the allocation for Goods and Services for all Ministries, Departments, and Agencies (MDAs) in 2025.
Legacy Arrears and Debt
In addition to the current energy sector shortfall, Ghana faces significant unpaid legacy arrears owed to Independent Power Producers (IPPs), totaling US$1.73 billion as of the end of 2024.
Recovery Measures
To address these challenges, the government has outlined several energy sector recovery program interventions, including:
- Improving Collection Efficiency: ECG and NEDCO will implement measures such as metering and Private Sector Participation (PSP) strategies.
- Liquid Fuel-to-Gas Swap: Increasing N-Gas supply to take advantage of cheaper gas prices.
- IPP Capacity Renegotiations: Completing renegotiations to generate savings through lower fixed capacity charges and variable O&M charges.
- Tariff Adjustments: PURC will implement Quarterly Tariff Adjustments and a major tariff adjustment in the 4th quarter of 2025.
- Weighted Average Cost of Gas: Increasing the cost from $7.836 per mmbtu to $8.45 to reflect increased prices and changes in the supply mix.
Ruth Abla ADJORLOLO
