Energy Sector Reset Focused on Structural Reforms, Not Quick Fixes – Dr. Theo Acheampong
Economist and Technical Advisor at the Ministry of Finance, Dr. Theo Acheampong, says Ghana’s ongoing energy sector reforms are focused on aligning incentives and strengthening institutions to close structural financing gaps over the medium term, rather than pursuing short-term fixes.
Speaking on the NorvanReports and Economic Governance Platform (EGP) X Space discussion themed “Energy Sector ‘Reset’: Will it End the Circular Debt or Recreate It?”, Dr. Acheampong noted that the challenges confronting the power sector cannot be resolved within months, stressing that the reforms underway are deliberately structured to deliver lasting sustainability.
“At the highest level, it is about aligning incentives and institutions,” he explained, adding that the objective is to ensure that actors across the value chain operate within systems that gradually eliminate the sector’s financial shortfalls.
He outlined six key interventions currently being implemented by government to address the structural weaknesses in the sector. The first, according to him, is the clearance of legacy debt and the restoration of credibility with partners, achieved through negotiated settlements and efforts to remain current on payment obligations.
The second intervention involves the renegotiation of Independent Power Producer (IPP) contracts and Power Purchase Agreements (PPAs) to lower future costs and reduce the sector’s structural deficit, particularly in the context of existing tariff constraints.
Third, Dr. Acheampong pointed to improved cash discipline across the energy value chain, driven by the consistent enforcement of the Cash Waterfall Mechanism (CWM). He said rising collections and more predictable distribution of revenues, as reflected in regulatory reports, signal progress in this area.
The fourth pillar of the reform agenda, he said, is broader distribution sector reform, with a focus on private sector participation in ECG’s operations. He clarified that government is not pursuing an outright sale of ECG, but rather seeking private expertise to improve collections and align incentives. Drawing on past experience, he noted that billing and revenue performance improved during the brief period of private sector involvement.
He disclosed that although the transaction advisory process has experienced some delays, government expects increased momentum in the coming weeks to advance the private sector participation agenda.
On fuel supply, Dr. Acheampong said the fifth intervention centres on reducing reliance on expensive liquid fuels by leveraging increased availability of domestic gas. Additional gas supplies from offshore partners, including ENI and Tullow, he noted, are helping substitute light crude oil imports and lower generation costs.
Beyond these measures, he identified governance reforms as a cross-cutting priority, emphasising transparency, competitive procurement, and accountability. He stated that government’s goal is to achieve competitive power pricing, with total generation costs below eight US cents per kilowatt-hour, noting that some developers are already indicating the feasibility of such pricing.
Dr. Acheampong added that steps are being taken to improve contract transparency, with signed power agreements disclosed publicly and a commitment to make future contracts accessible to citizens.
He further highlighted long-standing procurement and governance challenges within ECG, referencing World Bank findings during the height of Ghana’s power crisis that flagged procurement abuse and over-procurement. According to him, addressing these issues requires tying ECG management to clear performance indicators and measurable deliverables.
Summarising the reform agenda, Dr. Acheampong said government’s approach combines debt clearance, contract renegotiation, stricter cash discipline, private sector participation in distribution, cheaper gas supply, and strong governance reforms to ensure the energy sector is placed on a sustainable footing beyond the short term.
