President John Dramani Mahama says his administration inherited an energy sector on the verge of collapse, weighed down by unsustainable debts. Despite the collection of over GHS45 billion in Energy Sector Levies (ESLA) over the past eight years, Ghana’s energy sector remains burdened with a staggering GHS 70 billion debt as of December 2024. This has left state-owned enterprises (SOEs) struggling, while Independent Power Producers (IPPs) and fuel suppliers threaten to cut supply over unpaid invoices.
The financial distress has also led to postponed critical maintenance works, such as the pigging of the West African Gas Pipeline (WAPCO), which was rescheduled from 2024 to 2025. Without alternative contingency measures, the government had to swiftly mobilize emergency fuel supplies to prevent a total blackout.
“My administration has had to swiftly mobilise resources to secure emergency fuel supplies, ensuring that electricity generation continues despite the difficult circumstances” President Mahama noted.
“I have been informed that the pigging exercise will be completed in the first weeks of March. Once additional gas flows from Nigeria, we anticipate a marked improvement in the power situation”. He added.
To address the sector’s financial instability, Mahama’s administration is introducing structural reforms, including the implementation of a single revenue collection account and strict adherence to the Cash Waterfall Mechanism (CWM). The objective is to ensure equitable distribution of energy sector revenues, reduce inefficiencies, and improve liquidity for service providers.
As part of these efforts, the Energy Ministry has set up an advisory committee to enhance private sector participation in metering and billing. This initiative aims to tackle high commercial and technical losses, which have long plagued the Electricity Company of Ghana (ECG) and other state-owned utilities.
“The Minister, following my directive has set up an advisory committee to guide the participation of the private sector in metering and billing in order to improve efficiency in revenue collection and reduce the high commercial and technical losses that are threatening to drown the state-owned utility company”. Mahama assured.
A promising pilot project with Enclave Power Limited has demonstrated the potential of this model. Under the arrangement, ECG supplies bulk power to Enclave Power, which manages metering and billing within Ghana’s Free Zones Enclave. The project has achieved an impressive 99% revenue collection rate and nearly 100% uptime, offering a blueprint for wider implementation across the country.
Beyond Dumsor: A Push for Renewable Energy
The administration is also taking steps to reduce Ghana’s dependence on crude oil for power generation. The medium-term target is to achieve 100% gas utilization, which would significantly cut down the hundreds of millions of dollars currently spent on fuel oil imports.
A Renewable Energy and Green Transition Fund is also being established to drive investments in solar energy, off-grid systems, electric vehicle charging stations, and other sustainable solutions. These measures aim to diversify Ghana’s energy mix and improve long-term energy security.
Revitalizing the Petroleum Sector
While the power sector grapples with financial instability, Ghana’s petroleum industry faces its own crisis. Crude oil production has declined by over 32% due to regulatory opacity, a hostile investment climate, and political interference. This downturn has severely impacted Sekondi-Takoradi, once a hub for upstream oil and gas activities.
Mahama has pledged to restore investor confidence by fostering a business-friendly environment. Discussions with industry stakeholders have reportedly secured commitments for substantial investments in the upstream sector, potentially reversing the current decline.
Can Mahama’s Reforms Deliver?
While Mahama’s plans are ambitious, the success of his energy sector recovery efforts will depend on their swift and effective implementation. Strict enforcement of the Cash Waterfall Mechanism, a crackdown on revenue leakages, and private-sector partnerships in metering and billing could stabilize finances. However, systemic issues such as political interference, inefficient SOEs, and historical mismanagement remain significant hurdles.
If the administration can execute these reforms effectively, Ghana may not only avoid another “dumsor” crisis but also lay the groundwork for a more resilient and sustainable power sector. The coming months will be crucial in determining whether these policy interventions can deliver long-term stability or if Ghanaians will once again face the dark reality of persistent power outages.
