The Africa Sustainable Energy Centre (ASEC) has raised critical concerns following a detailed analysis of the 2026 Budget Statement and Economic Policy, presented by the Minister for Finance, Cassiel Ato Forson, on 13 November 2025.
While the Budget — themed “Resetting for Growth, Jobs, and Economic Transformation” — has been widely praised for restoring macroeconomic stability, ASEC cautions that Ghana’s fiscal recovery remains endangered by structural weaknesses in the energy sector.
With significant improvements such as a dramatic decline in public debt, a Cedi appreciation of nearly 35%, and a primary balance surplus of 1.6% of GDP, the government has earned recognition for stabilising the economy.
Successful debt renegotiations have saved over $250 million, and enforcement of the Cash Waterfall Mechanism (CWM) has boosted ECG’s monthly revenue from GH¢900 million to GH¢1.7 billion. However, ASEC warns that these gains sit atop a fragile foundation, as the budget fails to confront systemic inefficiencies within the power sector.
Four Systemic Loopholes Identified:
- GH¢20 Billion Allocation Without Performance Accountability
The 2026 Budget commits GH¢20 billion to the energy sector: GH¢15.2 billion for energy sector shortfall payments and GH¢4.8 billion for legacy IPP debt. While legacy debt service is necessary, ASEC is concerned that the massive shortfall allocation lacks explicit, time-bound performance targets for reducing Technical and Commercial (T&C) losses — the primary driver of the deficit. Without linking funding to measurable ECG reforms, the budget risks entrenching an annual subsidy rather than incentivising lasting efficiency.
- Risky Proposal to Redirect Ghana Petroleum Funds (GPFs)
ASEC warns that the proposal to revise the investment policy of the Ghana Petroleum Funds — allowing domestic investment in commercial state-owned energy projects — poses a serious fiscal threat. The Funds, held in US Dollars, act as external stabilisers against commodity shocks and currency depreciation. Diverting them into the high-risk domestic energy sector compromises their mandate and exposes Ghana’s sovereign wealth to undue commercial risk.
If you would like more information on this topic, send us an email at info@asec-gha.com.
- Premature Commitment to a 1,200 MW State-Owned Thermal Plant
The government’s plan to begin constructing a 1,200 MW thermal plant in 2026 risks repeating the historical error that created over US$1.4 billion in legacy capacity payments: building generation ahead of demand and distribution efficiency. ASEC stresses that without reducing T&C losses and improving power evacuation capacity, additional generation will deepen fiscal liabilities rather than solve structural issues.
- Chronic Underutilisation of Petroleum Revenues (ABFA)
ASEC notes the alarming underuse of the Annual Budget Funding Amount (ABFA). As of September 2025, only 0.43% of the US$290 million available had been utilised. This execution gap undermines growth, delays critical infrastructure under the GH¢30 billion Big Push Programme, and weakens confidence in the government’s ability to translate revenue into development outcomes.
ASEC proposes the following measures to ensure the energy sector does not derail Ghana’s economic progress:
- Mandate Performance-Based Funding for ECG
Tie the GH¢15.2 billion shortfall allocation to measurable quarterly T&C loss reduction targets, ensuring funding drives reforms rather than subsidises inefficiencies.
- Accelerate Distribution Sector Reform
Expedite the Private Sector Participation (PSP) process for ECG from Q3 2026 to the first half of the year. Transferring commercial risk to a private operator is essential to eliminate persistent shortfalls.
- Protect Ghana’s Sovereign Wealth Funds
Maintain the Ghana Petroleum Funds’ mandate as external fiscal buffers and keep investments limited to low-risk, foreign-denominated assets, in line with the Petroleum Revenue Management Act.
- Reassess Generation Expansion Plans
Commission an independent Capacity Needs Assessment (CNA) before committing to the 1,200 MW thermal plant. Prioritise investment in transmission, distribution, and system efficiency to maximise value from existing generation assets.
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