The Minister of Finance, Cassiel Ato Forson, has bemoaned inefficiencies in Ghana’s energy sector that has affected the country’s debt sustainability efforts. According to him, the energy sector currently poses the biggest risk to the economy burdened with a financial shortfall of approximately US$2 billion, surpassing domestic capital expenditure in the West African nation.

He made this known on the sidelines of the IMF/World Bank Spring Meetings this year during a deep-dive session on Ghana’s Energy Compact under Mission 300 at the World Bank Head Quarters in Washington DC. Dr. Forson noted, the challenge in the energy sector is one that requires an urgent reform to the value chain where inefficiencies in the distribution sector are passed onto consumers as ‘high’ tariffs while the challenge really goes beyond tariffs. Therefore as a matter of policy, the government through Cabinet has approved for a private sector participation of the energy sector and a Legislative Instrument is due in Parliament, when the House reconvenes later in May, to enable competitive procurement of power plants.

He observed, ECG, the State-owned electricity distribution company for the southern sector could cut the shortfall by half if it focuses on addressing its distribution inefficiencies which would go a long way to reduce its debt concern and lower consumer tariff in the process. However on the Ghana Energy Compact, the Minister was hopeful that all the processes would be completed without delay in order that Ghana can benefit from the compact which “has come at the right time” and “has the potential make a lasting impact”.

The Mission 300 project is an ambitious initiative led by the World Bank Group and African Development Bank to connect 300 million people to electricity in the sub-Saharan Africa region by the year 2030. The project brings together African governments, private sector and development partners to deliver affordable power, expand electricity access, boost utility efficiency, attract private investment and improve regional energy integration that drives economic transformation. The World Bank is contributing $30 billion to the project. Under the Dar es Salaam Energy Declaration, African governments have committed to important sector reforms that are being implemented through country-led Energy Compacts.

“Time is of the essence. We must act swiftly to turn this around for the good of our economy and the well-being of our people.”, Dr. Forson concluded