By Adnan Adams Mohammed
Ghana’s power sector continues to swallow vast public funds, requiring an extraordinary GH¢12.85 billion in direct Treasury interventions during the 2025 fiscal year, despite a major overhaul and increase in fuel levies designed to make the energy industry self-sustaining.
Details submitted to Parliament by Finance Minister Dr. Cassiel Ato Forson in the annual report on the management of the Energy Sector Support Account revealed that while the consolidated fuel levy yielded billions of cedis, the total expenditure required to keep the lights on reached GH¢22.67 billion (approximately US$1.9 billion).
Increased Levies Fall Short of Soaring Obligations
In April 2025, Parliament consolidated several energy-related charges including the Energy Debt Recovery Levy, Energy Sector Recovery Levy, Sanitation and Pollution Levy, and the Price Stabilization and Recovery Levy into a single Energy Sector Shortfall and Debt Repayment Levy. Two months later, the government increased the levy rate from 95 pesewas to GH¢1.95 per litre.
Despite generating GH¢8.81 billion from fuel consumers in 2025, the dedicated account fell far short of covering the power grid’s total liabilities.
“Lodgements for the period under review amounted to GH¢8.81 billion… Total utilisation from the Energy Sector Support Account in 2025 amounted to GH¢9.82 billion, comprising payments for energy sector shortfalls and the repayment of legacy debt,” the Finance Ministry reported. “Despite the substantial revenue generated by the levy, the proceeds were insufficient to meet the sector’s total financial obligations for the year.”
To prevent blackouts and address mounting arrears, the Controller and Accountant General’s Department had to step in, transferring GH¢12.85 billion directly from the Treasury Main Account to bridge the massive financing gap.
Clearing Past Debts vs. Stopping Current Losses
A breakdown of the Treasury’s intervention shows that the majority of state assistance went toward resolving historical debt rather than operational shortfalls. Of the GH¢12.85 billion supplied by the central government, GH¢7.69 billion was deployed to clear legacy debts, while GH¢5.16 billion was used to meet current operating shortfalls.
Treasury funds were also utilized to restore the World Bank Partial Risk Guarantee, a crucial facility that had previously been drawn down due to default risks.
Ministry officials emphasized that these heavy expenditures reflect a deliberate strategy to clear inherited structural liabilities once and for all.
“Government is attempting to aggressively clear legacy debt while simultaneously meeting current sector obligations,” the report noted, adding that while the additional levy helped narrow the gap, it could not unilaterally absorb deep-seated structural issues.
Persistent Structural Weaknesses
The reliance on direct Treasury support comes even as power distributor Electricity Company of Ghana (ECG) complied with the Cash Waterfall Mechanism and eliminated under-declared revenues. Energy analysts point out that systemic inefficiencies continue to bleed the sector.
The Finance Ministry identified several recurring operational bottlenecks that require fundamental reform:
“The figures suggest that while the additional GH¢1 levy helped narrow the financing gap, it has not solved the sector’s underlying problems,” the report highlighted. “They include poor revenue collection, system losses, weaknesses in the implementation of the Cash Waterfall Mechanism, expensive power purchase agreements, and inefficiencies across the sector’s value chain.”
Looming Outlook for 2026
With fiscal pressures escalating, the state’s projections offer little immediate respite. The 2026 Budget projects that energy sector shortfall financing requirements will rise further to GH¢15.2 billion, up from approximately GH¢12 billion in 2025.
To stem future Treasury interventions, the government is pursuing private sector participation in ECG’s distribution business alongside technical upgrades aimed at reducing commercial losses. However, until those structural reforms yield results, Ghanaian taxpayers face a dual burden: paying higher petroleum prices at the pump and seeing billions in general tax revenue diverted to keep the power sector afloat.