Ghana’s Energy Sector Poses Major Economic Threat, Says Finance Minister Ato Forson
Ghana’s Minister of Finance, Dr. Cassiel Ato Forson, has identified the energy sector as the most pressing economic risk currently confronting the nation. Speaking after a strategic session on the Ghana Energy Compact under Mission 300 at the World Bank in Washington, D.C., Dr. Forson revealed that the sector is grappling with a staggering $2 billion financial shortfall. This deficit, he noted, exceeds Ghana’s entire domestic capital expenditure, highlighting the urgent need for comprehensive reforms.
Dr. Forson pointed out that inefficiencies across the energy value chain, particularly in the distribution sector, are driving up costs for ordinary Ghanaians through inflated tariffs. He emphasized the role of the Electricity Company of Ghana (ECG) in addressing these inefficiencies, suggesting that ECG alone could potentially cut the financial gap in half if it streamlined its operations. The minister underscored that reforming the sector goes beyond adjusting tariffs; structural change is essential.
To address the situation, the government has begun implementing measures aimed at introducing private sector participation. According to Dr. Forson, Cabinet has approved this direction and a Legislative Instrument has been laid before Parliament to pave the way for competitive procurement of power plants. He praised the Ghana Energy Compact initiative as timely, expressing optimism that these efforts could bring both transparency and long-term sustainability to the struggling sector.
These developments follow Ghana’s recent staff-level agreement with the International Monetary Fund (IMF) on the fourth review of its economic recovery programme. The agreement is expected to unlock around $370 million in financial assistance, providing a much-needed cushion as the country navigates economic challenges. Dr. Forson stressed the importance of swift and decisive action to stabilize the energy sector and, by extension, the national economy.
Source: Citi newsroom