Government Announces Bold Energy Sector Reforms to Address Deficit and Efficiency Challenges

Finance Minister Dr. Cassiel Ato Forson has outlined a comprehensive set of reforms aimed at tackling critical challenges within Ghana’s energy sector. Presenting the 2025 Budget in Parliament, Dr. Forson pledged the government’s commitment to enhancing revenue collection, optimizing energy costs, and ensuring long-term sector sustainability.

To address inefficiencies and financial shortfalls in the energy sector, the government will implement the Energy Sector Recovery Programme (ESRP), which includes:

Enhanced revenue collection: ECG and NEDCo will introduce metering initiatives and a Private Sector Participation (PSP) strategy to improve efficiency.

Fuel cost optimization: Increasing N-Gas supply from 60 mmsc to 100 mmsc to transition from liquid fuels to more affordable natural gas.

Renegotiation of IPP contracts: Finalizing agreements to lower fixed capacity and variable charges, generating cost savings.

Additionally, in line with commitments under the IMF-supported economic reform agenda, the following measures will be enforced.

“As agreed with the IMF by the previous administration, we will implement the following ESRP measures to achieve the Structural Benchmark of the IMF programme. PURC will continue to implement the Quarterly Tariff Adjustment to reflect changes in inflation, exchange rate, and generation mix” The Minister highlighted.

Major tariff revision in Q4 2025 to account for increased capacity charges, fuel costs, and capital expenditures. Increase in Weighted Average Cost of Gas from $7.836 per mmbtu to $8.45 to align with rising natural gas prices. Removal of industrial gas subsidies granted under the Discounted Industrial Development Tariff to selected ceramic companies.

These reforms signal a decisive shift towards financial sustainability, ensuring efficiency in energy supply while aligning sector policies with global economic realities. The government remains focused on securing a stable, cost-effective, and resilient energy future for businesses and consumers alike.

Last Updated on March 14, 2025 by samboad