Reducing its $2.5 billion in arrears to independent power producers and gas suppliers is an immediate priority for Ghana’s new government. They hope to accomplish this within the next year. President John Dramani Mahama expressed optimism about addressing the financial challenges plaguing the country’s power sector during a recent address.
Last year, Ghana reached a debt restructuring deal with its independent power producers. This agreement permitted the nation to resolve just over $1 billion of its historical obligation. This strategic maneuver was just one of many included in a larger plan to shore up the energy sector, which has continued to struggle due to further challenges. Former President Mahama had acknowledged the enormous wastage that had beset the government-run power provider, Electricity Company of Ghana (ECG). This company has already been hit with a near 40% revenue collection loss.
To help address these issues, President Mahama urged firms to redouble their efforts to extract oil and gas reserves. He noted the importance of this initiative amid the global energy transition, stating, “Oil is in transition and so everybody who has any assets should be pumping like there is no tomorrow… I would lay a red carpet to anybody who wants to drill and pump oil to do so.”
Their cabinet is currently working to establish the form of future partnerships. They are making the inclusion of one or more independent entities a priority, giving primary consideration to local participation. This is intended to reduce burdens to make the economy more robust. Simultaneously, it addresses chronic arrears that have savaged fiscal credibility since President Mahama started his second term in January.
Their Mission 300 initiative seeks to bring electricity to 300 million Africans by 2030. More recently, it scored more than $8 billion of new funding commitments at the Africa Energy Summit in the capital Dar es Salaam, Tanzania. This funding will help to be a game-changer in improving energy access throughout the continent.
Given the country’s continuing economic challenges, President Mahama stressed the need for immediate action to resolve inefficiencies in the power sector. “People are queuing up, I said they should wait. We are going to do expressions of interest,” he stated, indicating a proactive approach to engaging stakeholders in the energy sector.