News Guide Africa

Tag: Energy investment

  • Ghana’s 2026 Budget: A Missed Opportunity for Energy Reform?

    Ghana’s 2026 Budget: A Missed Opportunity for Energy Reform?

    Ghana’s 2026 budget has been hailed as a step in the right direction, with the country making significant strides towards macroeconomic stability.

    However, a closer look at the energy sector reveals a different story. Despite the government’s efforts to address the sector’s challenges, the budget falls short in providing a comprehensive solution to the country’s energy woes.

    The Africa Sustainable Energy Centre (ASEC) has raised serious concerns about the budget, warning that the energy sector remains burdened by long-standing structural weaknesses that threaten fiscal stability. One of the major concerns is the lack of accountability measures in the GH¢20 billion allocated to the energy sector. The allocation lacks clear, performance-based accountability measures, risking an annual bailout rather than driving sector reform.

    The government’s proposal to revise the investment policy of the Ghana Petroleum Funds has also been criticized. The move could expose Ghana to unnecessary fiscal risk and undermine the purpose of the sovereign wealth framework. Furthermore, the plan to construct a 1,200MW state-owned thermal plant in 2026 has been questioned, with critics arguing that it could repeat past mistakes, leading to over US$1.4 billion in excess capacity payments.

    The underutilisation of petroleum revenues is another concern. Only 0.43% of the US$290 million available through the Annual Budget Funding Amount (ABFA) had been spent as of September 2025, weakening investor confidence and delaying progress under the US$10 billion Big Push Programme.

    Experts have called for reforms in the energy sector, including the implementation of a performance-based Cash Waterfall Mechanism (CWM) to ensure efficient revenue management. They also recommend prioritizing renewable energy and smart infrastructure to diversify Ghana’s energy mix and improve energy efficiency.

    The 2026 budget’s shortcomings in the energy sector are concerning, and it’s crucial for the government to revisit and revise its energy strategy to ensure sustainable growth and development.

    As Adnan Adams Mohammed, a financial and economic journalist and author of this feature article puts it, “The budget falls short in addressing the country’s energy challenges, and it’s time for the government to take a more proactive approach to reforming the energy sector.”

    The government must take concrete steps to address the concerns raised by ASEC and other stakeholders. This includes tying the GH¢15.2 billion allocation for shortfalls to specific quarterly loss-reduction targets for the Electricity Company of Ghana (ECG), accelerating private-sector participation reforms, and protecting the mandate of the Ghana Petroleum Funds.

    The energy sector is a critical component of Ghana’s economy, and it’s essential that the government gets it right. With the right reforms and investments, Ghana can achieve sustainable energy security and drive economic growth.

     

    By Adnan Adams Mohammed

     

     

     

     

     

     

     

     

     

     

     

  • Regulatory reforms needed to boost investment in upstream petroleum sector

     

    Reforms to boost Ghana’s petroleum sector

    Adnan Adams Mohammed

     

    The new President John Mahama administration has been urged to take critical steps to ensure comprehensive regulatory reforms in Ghana’s upstream petroleum sector.

     

    According to an Alliance of Civil Society Organizations, the reforms are needed to attract significant investment and revitalize the industry.

     

    They argue that the current government’s ability to address policy inconsistencies and foster a predictable regulatory environment will help reverse the steady decline in domestic crude oil production and create a more dynamic sector.

     

    “Over the past 3-4 years, we have witnessed a decline in upstream petroleum production. Exploration activities are almost nonexistent, and one of the primary issues is policy and regulatory uncertainty within the sector”, Nana Amoasi VII, Executive Director of the Institute for Energy Security, representing the alliance said at a press briefing last week. “We are urging the government to ensure consistency and coherence in policies to instill confidence among existing and potential investors. A stable policy environment is critical for securing long-term investments.”

     

    According to the 2024 Ghana’s Upstream Petroleum Business Outlook Report, without rigorous reforms, the sector could lose up to US$2 billion in investment in 2025.

     

    It was projected in the report that investments in Ghana’s upstream petroleum sector in 2024 would be around US$1.0 billion, which is a 40% decrease from the previous year.

     

    The sector faced challenges such as low crude oil production, political interference, and environmental concerns.

     

    Nana Amoasi VII also emphasized the need to strengthen the integration between the upstream and downstream petroleum sectors, advocating for the prioritization of crude oil allocation to local refineries.

     

    “There needs to be synergy between the upstream and downstream sectors. Our petroleum agreements stipulate that crude oil from domestic fields should be prioritized for local refineries, yet this is not being enforced. We are urging the government to uphold these agreements and regulations to enhance domestic processing capacity,” he added.

     

    The proposed reforms aim to create a favorable investment climate while bolstering Ghana’s refining capabilities, ensuring that the country maximizes the economic benefits of its petroleum resources.

     

    Ghana’s dwindling upstream petroleum sector investment comes at a time investors are pulling out of fossil fuel financing due to environmental concerns.