Ghana’s chronic inefficiencies in the energy sector is not only leading to mounting public debt and unstable power supply, but it’s also suffocating expenditures in other critical sectors of the economy.
Other vital areas of national development, according to Dr. Charles Gyamfi, Policy Lead for Climate Change and Energy Transition at the Africa Centre for Energy Policy (ACEP), are bearing the brunt of the energy sector.
The energy sector player made this case when he spoke at a Civil Society Forum on Indebtedness and Energy Security.
Dr. Charles Gyamfi painted a stark picture of how financial leakages in the power sector have become the bane of Ghana’s broader development agenda. He explained that the government is spending millions of these limited resources to virtually “fund” the inefficiencies of the power sector.
These are resources, he believes, could have gone into other sectors of the economy such as agriculture, education, health etc, if the energy sector were efficient to drive economic growth.
Dr. Gyamfi further indicated that the evidence is glaring in the country’s budgetary allocations when significant resources are committed to the energy sector while meager portions are allocated to other sectors.
He adds that the tariffs consumers pay for the utility should be able to pay all the necessary costs in the sector. However, due to under-recovery, technical and commercial losses, corruption, and other factors, the revenues are inadequate to cover the expenses, hence the need for the government to spend on the sector.
“Typically, your tariffs are supposed to pay for generation for distribution for transmission, and even fuel. When it is not able due to inefficiencies, the government has to pay, and that means that the budget has to suffer,” Dr. Charles Gyamfi remarked.
Dr. Gyamfi noted that public funds that should have been invested in critical social sectors such as agriculture, education, health, and infrastructure are being redirected to cover shortfalls in the energy sector.
“If you look at the allocation to capital expenditure in social sectors like agric like gender like roads like education and health you will know that they are very very small compared to how much was being budgeted to deal with power sector shortfalls and and those monies could have been used to improve the budget and then to support other social social initiatives and interventions and that is the reality,” he indicated.
He added, “The more you spend on power sector shortfalls, the more you forego other interventions in the other social sectors.”
This imbalance has left Ghana trapped in a cycle where energy inefficiency undermines fiscal space for other priorities.
This perspective from the expert reinforces the public outcry, including that of the IMF and the World Bank, calling for the need for reforms to improve transparency, reduce losses, and ensure the energy sector funds itself sustainably.
