A fierce debate over electricity subsidies has exposed deep cracks in Ghana’s energy sector, with advocates clashing over whether fiscal austerity or structural reforms should take priority.
The dispute, reignited by Finance Minister Cassiel Ato Forson’s warning that subsidies are straining public finances, has drawn sharp pushback from consumer rights groups who argue that fixing chronic mismanagement at the Electricity Company of Ghana (ECG) must come first.
Duncan Amoah, Executive Secretary of the Chamber of Petroleum Consumers (COPEC), likened the state-owned ECG to a “leaking bucket,” insisting that raising tariffs or cutting subsidies without addressing the utility’s inefficiencies would only punish households. “You can’t ask Ghanaians to pour more money into a broken system,” he told News Ghana during the National Economic Dialogue this week. “ECG loses nearly 40% of the power it buys due to theft and faulty infrastructure. Plug those holes before hiking bills.”
The ECG’s struggles are no secret. Years of poor debt recovery, illegal connections, and aging grids have left the company hemorrhaging an estimated $1.5 billion annually. Meanwhile, the government spends roughly $500 million each year to cushion electricity prices for households and businesses—a lifeline for low-income families but a growing burden on a debt-strapped economy. Forson, tasked with meeting IMF fiscal targets under Ghana’s $3 billion bailout program, has labeled subsidies “unsustainable,” urging reforms to free up funds for healthcare and education.
Yet critics like Amoah warn that scrapping subsidies prematurely would backfire. “Families already face 35% inflation and soaring fuel costs. Forcing them to pay higher tariffs while ECG keeps wasting resources isn’t just unfair—it’s political suicide,” he argued. His stance resonates in neighborhoods like Accra’s Jamestown, where residents complain of erratic billing and blackouts despite subsidized rates. “Why pay more for darkness?” asked local trader Ama Serwaa.
The tension underscores a broader dilemma in Ghana’s economic recovery: how to balance IMF-mandated austerity with social stability. Analysts suggest a middle path—overhauling ECG’s operations *before* adjusting tariffs. Proposals include installing smart meters to curb theft, privatizing loss-making divisions, and cracking down on corporate defaulters, including state agencies that owe ECG millions.
Ghana isn’t alone in this struggle. Neighboring Nigeria and Kenya have faced similar backlash over subsidy cuts, with protests erupting when price hikes outpace service improvements. What sets Ghana apart, however, is the ECG’s role as both a fiscal drain and a social safeguard.
As the government weighs its options, one truth is undeniable: without fixing the ECG’s rot, no policy—subsidy or none—will deliver affordable, reliable power. The stakes are high. Get it wrong, and Ghana risks not just economic fallout but a crisis of trust in its institutions. For citizens already juggling rising costs, patience is wearing as thin as the power lines above their heads.
