Ghana’s Energy Minister, John Abdulai Jinapor, has sounded the alarm over the deepening financial crisis in the country’s power sector.
Speaking at a recent dialogue, Jinapor revealed that Ghana is billed approximately $175 million monthly for power-related expenses but collects less than $100 million, leaving a staggering shortfall of about $70 million each month.
This deficit translates to an annual liability of $840 million, exacerbating the sector’s already mounting debts, which currently stand at around GHC 80 billion.
“The major problem is that we have a total bill of about $175 million every month, especially with the power sector. The collection is less than $100 million. Even going forward, if nothing is done, you’re going to be incurring about $70 million every month as a shortfall or liability, and that for me is a major issue,” Jinapor stated.
To tackle these challenges, the minister outlined a three-pronged strategy aimed at stabilizing the sector and ensuring long-term sustainability:
1. Enhancing Efficiency and Discipline: Jinapor emphasized the need for greater operational discipline and efficiency within the energy sector to reduce financial leakages and improve overall performance.
2. Private Sector Participation: The minister advocated for increased private-sector involvement in the management of the distribution segment, particularly with the Electricity Company of Ghana (ECG). This move, he argued, would boost revenue collection and enhance service delivery.
3. Transition to a Gas-Powered Future: Highlighting the potential for significant cost savings, Jinapor called for an urgent shift towards gas power. He noted that liquid fuel bills alone amount to approximately $1 billion annually. By reallocating half of this expenditure, Ghana could finance the construction of a gas processing plant, saving the nation an estimated $600 million per year.
Jinapor also revealed that the government is considering private-sector participation in energy distribution and revenue collection. A decision on whether to pursue full privatization or adopt a concession model—where a private entity manages operations for a specified period before returning them to the state—is expected within the next six months.
The minister’s remarks underscore the urgent need for reforms in Ghana’s power sector, which has long struggled with financial instability, inefficiencies, and mounting debts. The proposed measures aim to address these issues while ensuring reliable and affordable energy for Ghanaians.
However, the success of these initiatives will depend on effective implementation and collaboration between the government, private sector, and other stakeholders. As Ghana grapples with its energy challenges, the coming months will be critical in determining the sector’s future trajectory.
