Accra: The Institute for Energy Security (IES) has warned that Ghanaians will pay higher energy tariffs if the sector's US$3.1 billion debt is not cleared urgently. Nana Amoasi VII, Executive Director, IES, explained that the debt would keep increasing, should measures like the suspended GHS1 energy sector levy, were not implemented. The levy is part efforts to address the sector's systemic challenges in relation to the implementation of a three-year US$3bn International Monetary Fund (IMF) loan-supported programme, expected to end in 2026.
According to Ghana News Agency, Nana Amoasi VII highlighted that in the long run, consumers might face higher electricity tariffs as a consequence of the unresolved debt issues. The levy is necessary due to the government's inability to finance fuel supply to power plants, resulting in difficulties in dispatching thermal power plants to meet electricity demand. This has been compounded by the loss of external funding credibility, misapplication of Energy Sector Levy and Debt Recovery Levy (ESLA) funds, and increased commercial and technical losses at the Electricity Company of Ghana (ECG).
Other challenges plaguing the sector include non-compliance with the cash waterfall system, poor revenue collection, political interference, and wrongful procurements. Nana Amoasi VII noted that ESLA was initially projected to generate approximately US$600 million annually, based on petroleum consumption levels of 3.9 million metric tonnes per year, with the aim of clearing the debt within five years. However, nearly nine years later, the mechanism has not achieved its objectives.
The IES Executive Director also pointed out the missed opportunity with the ECG partner concessionary agreement with PDS, attributing it to greed, lack of transparency, and inadequate due diligence. He urged the government to deepen stakeholders' engagement to reach a consensus on the best path forward for addressing Ghana's energy sector debt crisis.
Nana Amoasi VII emphasized the need for an assured source of funding for the procurement of crucial liquid fuels, such as crude oil, heavy fuel oil, and distillates. He expressed confidence that the levy could provide the government with a steady revenue stream, reduce the fiscal burden, and free up resources for other development projects in areas like roads, health, and education.
He also recommended involving the private sector to bring in necessary funding, expertise, innovative tools, and help reduce systemic inefficiencies and losses. This approach could draw lessons from the collapsed Power Distribution Services (PDS) agreement. Nana Amoasi VII stressed the importance of transparency, open engagement, proper due diligence, and good governance in any future agreements.
Furthermore, he called for greater citizen engagement in critiquing inefficiencies and corruption within the energy sector, emphasizing the urgency of early action to prevent higher costs in the future.