A new report from Ghana’s Ministry of Finance has revealed that the country’s energy sector remains under significant financial pressure despite the introduction of the additional GH¢1 fuel levy aimed at reducing debt and funding shortfalls.
The findings highlight the scale of the challenges facing Ghana’s power sector, with revenues generated from the Energy Sector Shortfall and Debt Repayment Levy falling well short of the amount required to meet the sector’s obligations in 2025.
Government Introduced Levy to Tackle Mounting Energy Debts
Earlier in 2025, Parliament approved major changes to the Energy Sector Levies Act (ESLA), consolidating several existing charges into a single levy known as the Energy Sector Shortfall and Debt Repayment Levy.
The move was designed to simplify the levy system, improve transparency, and boost government revenue to support the struggling energy sector.
Just two months later, the levy was increased from 95 pesewas to GH¢1.95 per litre, with Finance Minister Dr. Cassiel Ato Forson stating that the additional GH¢1 would help reduce sector deficits, clear outstanding debts, and support stable electricity generation across the country.
Revenue Falls Short of Energy Sector Needs
Despite the increase, the latest figures show that the levy generated GH¢8.66 billion in revenue during 2025.
However, Ghana’s total energy sector obligations reached a staggering GH¢22.67 billion, leaving a significant funding gap that required direct government intervention.
Among the major expenditures were:
- GH¢5.46 billion to settle gas supply debts owed to Eni and Vitol.
- GH¢4.54 billion to pay outstanding debts to Independent Power Producers (IPPs).
- GH¢6.94 billion to restore the World Bank Partial Risk Guarantee.
- GH¢5.73 billion for the purchase of fuel and gas needed for electricity generation.
These payments underscore the enormous financial demands facing the sector despite efforts to improve revenue collection.
Government Forced to Inject Additional GH¢12.85 Billion
With levy proceeds unable to meet the sector’s financial requirements, the government stepped in with substantial support from the Treasury.
The report shows that an additional GH¢12.85 billion was transferred to support the energy sector.
Of that amount:
- GH¢5.16 billion was used to finance ongoing sector shortfalls.
- GH¢7.69 billion went toward repaying legacy debts accumulated over several years.
This means that a significant portion of government support was directed at clearing historical obligations rather than covering new operational deficits.
Signs of Progress, But Challenges Remain
The report also points to some positive developments within the energy sector.
The Electricity Company of Ghana (ECG) is reportedly complying fully with the Cash Waterfall Mechanism, reducing concerns about revenue underreporting.
In addition, the relative stability of the Ghana cedi has helped ease some pressure on the sector, as many fuel and gas purchases are priced in US dollars while electricity is sold locally in cedis.
Government is also pursuing reforms, including private sector participation in ECG’s operations and measures aimed at reducing technical and commercial losses across the power sector.
Bigger Challenges Ahead in 2026
Despite ongoing reforms and debt repayments, the outlook remains challenging.
According to projections contained in the 2026 Budget, Ghana’s energy sector financing gap is expected to rise to GH¢15.2 billion, compared to approximately GH¢12 billion in 2025.
The increase suggests that while government is making progress in addressing legacy debts, substantial financial pressures continue to weigh heavily on the sector.
What It Means for Ghanaians
The latest figures demonstrate the complexity of Ghana’s energy sector challenges.
While the additional GH¢1 fuel levy has generated billions of cedis in revenue, it has not been enough to fully bridge the gap between what the sector earns and what it owes.
As government continues efforts to clear old debts, improve efficiency, and attract private investment, the success of these reforms could play a crucial role in ensuring a more sustainable and reliable power sector in the years ahead.
🔥 For the latest juice in business, finance, politics, entertainment, lifestyle, sports, and trending stories from Ghana and around the world, log on to Jaysonlive.com — where news meets conversation. Stay informed. Stay entertained. Stay ahead.