Ghana’s government has announced plans to increase the Energy Debt Recovery Levy on fuel from GHC 0.49 per liter to GHC 1.49 per liter, aiming to generate approximately GHC 15 billion in revenue for 2025. This move is part of the government’s strategy to address the country’s significant energy sector debt, estimated to be around GHC 80 billion.
The additional revenue of GHC 5.9 billion from the levy hike will help bridge the financial gap in the energy sector. According to Finance Minister Dr. Cassiel Ato Forson, the current debt burden partially resulted from the previous administration’s failure to meet its obligations, leaving the current government to clear the arrears while continuing to make necessary payments [1][5].
Key Points of the Energy Debt Recovery Plan:
– Energy Sector Debt: The total energy sector debt stands at GHC 80 billion, with plans to clear the debt by early 2026.
– Levy Increase: The GHC 1 increase in the levy is expected to generate an additional GHC 5.9 billion in revenue.
– Quarterly Tariff Adjustment: The government plans to maintain quarterly tariff adjustments to ensure the Energy Company of Ghana (ECG) can manage its finances effectively, given its dollar-denominated payments to power producers.
– ECG Inefficiencies: ECG’s inability to account for over 30% of the power it sells contributes significantly to the debt burden, highlighting the need for reforms.
The government has emphasized the importance of sustaining the quarterly tariff adjustment mechanism, even after the IMF programme, to prevent further debt accumulation. This approach aims to ensure the financial sustainability of the energy sector and prevent disruptions to power supply. Alexander Afriyie