Ghana Pushes Private Sector Reforms to Rescue Ailing Energy Sector

Finance Minister Dr. Cassiel Ato Forson has revealed cabinet-approved plans to introduce private sector participation in Ghana’s energy sector, citing the need for urgent reforms to address a $2 billion financial shortfall that threatens economic stability.

The government has submitted legislation to parliament enabling competitive procurement for power plants as part of comprehensive measures to restore viability to the crisis-ridden sector.

Speaking at the World Bank’s Ghana Energy Compact meeting, Dr. Forson identified energy sector inefficiencies as Ghana’s most pressing economic vulnerability. “The entire value chain requires reform,” he stated, noting that distribution problems at the Electricity Company of Ghana (ECG) contribute significantly to losses that ultimately burden consumers through inflated tariffs. The minister emphasized that ECG could halve the sector’s deficit by addressing its operational deficiencies.

The proposed legislative changes aim to introduce transparency through competitive bidding processes while attracting private investment to modernize infrastructure. This comes as Ghana struggles with energy sector debts that now exceed annual domestic capital expenditure, creating fiscal strain amid broader economic challenges. Analysts observe that similar reforms in other African nations have yielded mixed results, with success depending on robust regulatory frameworks and tariff structures that ensure fair returns for investors while protecting consumers.

Ghana’s energy sector overhaul coincides with ongoing IMF program reviews, where sustainable solutions to the power crisis remain a key benchmark. The government’s ability to implement these reforms effectively will significantly influence both energy sector stability and broader macroeconomic recovery efforts. As parliament considers the new legislation, stakeholders await details on how the proposed competitive procurement system will balance private sector participation with public interest protections in this critical sector.