- The government wants to use natural gas and get the private sector involved
- Ghana has money shortages and high energy costs
- Electricity prices will go up in late 2025
The 2025 Budget Speech by Ghana’s Finance Minister, Dr. Cassiel Ato Forson, highlights the challenges facing the country’s energy sector and proposes measures to tackle them. Ghana is grappling with rising debt, inefficiencies, and high energy costs. The government’s proposed solutions aim to stabilize finances, improve efficiency, and ensure long-term sustainability, but these solutions also come with challenges.
A significant issue is the growing financing shortfall in the energy sector, with an estimated GH¢35 billion shortfall for 2025. Additionally, there is a large debt to Independent Power Producers (IPPs) and inefficiencies in revenue collection and high operational costs at institutions like the Electricity Company of Ghana (ECG) and Northern Electricity Distribution Company (NEDCo). The country is also burdened with high energy production costs, mainly relying on costly liquid fuels instead of cheaper natural gas.
The government’s Energy Sector Recovery Programme (ESRP) aims to address these problems by improving efficiency, reducing financial shortfalls, and increasing private sector involvement. Key measures include shifting from liquid fuels to natural gas, renegotiating IPP contracts, and raising tariffs to account for inflation, fuel costs, and infrastructure needs. Debt management and audits are also part of the strategy to ensure fiscal discipline.
The budget also focuses on infrastructure development through the $10 billion “Big Push” initiative, which includes energy-related projects to support economic growth. The transition to natural gas and greater private sector involvement could improve sector efficiency and financial sustainability, but there are concerns over the social impact of frequent tariff hikes and delays in energy project completion.
Although the budget highlights important steps to stabilize the energy sector, it faces challenges like the lack of focus on renewable energy and the risk of over-relying on natural gas. There’s also concern that fiscal consolidation may reduce funding for social programs, impacting poverty and inequality.
In conclusion, the 2025 Budget outlines crucial steps to address the energy sector’s challenges, but its success will depend on careful implementation and a balance between fiscal stability and social welfare.
