"Finance Minister Dr Ato Forson Flags Energy Sector as Key Economic Risk, Urges Urgent Reforms"

" Finance Minister Dr Ato Forson Flags Energy Sector as Key Economic Risk, Urges Urgent Reforms \r\n Ghana\u2019s Finance Minister, Dr Cassiel Ato Forson, has sounded the alarm over the country\u2019s beleaguered energy sector, describing it as the single greatest economic risk confronting the nation. \r\n Speaking at a technical session on the Ghana Energy Compact under the World Bank-led Mission 300 initiative at the sidelines of the 2025 Spring Meetings, Dr Forson disclosed that the sector is contending with an annual financial shortfall estimated at $2 billion, a figure he said exceeds Ghana\u2019s entire domestic capital expenditure envelope. \r\n \u201cThis crisis cannot be fixed with tariff adjustments alone. The real drag is inefficiency, particularly within electricity distribution, which is being unjustly transferred to households and businesses,\u201d Dr Forson warned. \r\n He pointed specifically to the Electricity Company of Ghana (ECG), noting that up to 50% of the sector\u2019s financial gap could be plugged through reforms in the distribution chain alone. \r\n The Minister revealed that the Cabinet has approved a major policy shift to allow for private sector participation in the restructuring of the sector. A Legislative Instrument (LI) has already been tabled in Parliament to permit competitive procurement of power generation services , a move aimed at driving cost efficiency and market discipline. \r\n \r\n \u201cThe Energy Compact is a timely and essential intervention,\u201d Dr. Forson added. \u201cIts swift implementation will be critical to preventing further macroeconomic deterioration and improving the quality of life for Ghanaians.\u201d \r\n The Ghana Energy Compact, a partnership between the Government of Ghana, the World Bank, and development stakeholders, is expected to serve as a blueprint for systemic reforms across generation, transmission, and distribution segments of the power sector. It includes performance-linked disbursements and governance benchmarks. \r\n With mounting debt, lingering power purchase agreement liabilities, and recurring distribution losses, the Minister\u2019s remarks underscore the urgency of structural reform. His comments follow months of concern from the IMF and local policy think tanks about the fiscal risks embedded in Ghana\u2019s energy obligations. \r\n The energy sector\u2019s financial woes have also been a key driver of arrears accumulation, which has strained the national budget and contributed to Ghana\u2019s need for multilateral financing. \r\n \u201cTime is of the essence,\u201d the Minister concluded. \u201cWe must act quickly to stop this economic haemorrhage.\u201d "

"Finance Minister Dr Ato Forson Flags Energy Sector as Key Economic Risk, Urges Urgent Reforms"

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