A report authored by the Africa Centre for Energy Policy (ACEP) claims that the power sector remains a major threat to Ghana’s economic sustainability.
ACEP stated that although the power sector remains a top priority for the International Monetary Fund (IMF) in redirecting Ghana to the path of fiscal sustainability, these efforts may be undermined by a lack of political will, inefficient decisions, a lack of accountability, and a deficit of context-appropriate solutions to the problems.
ACEP in its report said that the government’s efforts to revive the energy sector have led to radical revenue mobilization tactics, which have resulted in a 100% tariff increase that cannot be accounted for, thus thwarting a well-functioning power sector.
“Tariffs have increased by about 100 percent in the past nine months, but liquidity has worsened within the same period, raising concerns about revenue accounting by ECG, and the impact of the adjustments,” part of ACEP’s report read.
It continued that “the Cash Waterfall Mechanism recorded its poorest performance in March and April 2023, meeting only 11% of the revenue requirement. This is because of ECG’s discretionary spending and poor accounting. At the same time, more poor decisions are being made to further threaten the sustainability of the power sector, requiring a seismic shift in the governance of the sector.”
ACEP’s report dubbed ‘Protecting Ghana’s Economic Sustainability in the Face of Power Sector Risks’ projections are not far from the truth as Ghana came close to being cut off the power grid on July 1 as the Chamber of Independent Power Producers (IPPs) directed its members to cut supply due to an outstanding debt of approximately $1.73 billion.
The report also indicated that the conditionalities of the International Monetary Fund are not helping curb the revenue leakages in the country’s energy sector.