The need to address the energy sector’s mounting challenges has never been more pressing than it is currently. In response, the Minister of Finance and Member of Parliament (MP) for Ajumako-Enyan-Esiam, Dr Cassiel Ato Forson, has laid before Parliament a bill seeking to amend the Energy Sector Levies Act, 2025. The proposed bill aims to address the following key issues:

Boost revenue for the power sector to repay energy sector arrears
Reduce legacy debt in the energy sector
Ensure a stable power supply across the country

The Challenge: Energy Sector Debt

According to Dr Forson, the energy sector currently faces the greatest economic and fiscal threat to the country. The total energy sector debt as at the end of March 2025 stands at $3.1 billion, including debts owed to Independent Power Producers (IPPs), State-Owned Enterprises (SOEs), fuel suppliers, and other stakeholders.

Failure to Address the Debt: Implications

If the country fails to address the mounting challenges in the energy sector, the situation could lead to a full-blown crisis, warns Dr Forson. A minimum of $3.7 billion is required to clean up the energy sector’s overall indebtedness and reset the sector on a more stable path. This amount, however, cannot be paid off solely by tariffs or other means.

The Shift in Electricity Generation Mix

Dr Forson noted that the country now heavily relies on thermal power to supplement hydroelectric sources. However, the high cost of liquid fuel for thermal generation is not currently factored into electricity tariffs. This results in revenue shortfalls for the government.

The Impact on Tariffs

Including fuel costs in the current electricity pricing structure could lead to a significant hike in tariffs, which would greatly burden households and businesses. A 50 per cent increase in tariffs would be particularly onerous, as it would increase the cost of electricity for consumers.

Alternative Funding Option: Energy Sector Levies (Amendment) Bill, 2025

In contrast to simply passing the costs of liquid fuel to consumers, the proposed levies aim to provide a dedicated source of funding for the power sector. The proceeds will be earmarked for the procurement of essential fuel for power generation.

Key Provisions

Upward adjustment in the Energy Sector Shortfall and Debt Repayment Levy
Neutralizing of the impact on petroleum prices
Specific allocation of funds to power sector debt repayment

Implications on Petroleum Prices

Dr Forson assured the House that the impact of the new levy on petroleum prices would be neutralized by the strong performance of the Ghana cedi. The strong currency would offset the additional levies, ensuring that consumers would not pay extra for petrol or diesel beginning today.

Quotes from Dr Forson

“Mr Speaker, I repeat, the impact will be absorbed by the gains made from the strong performance of the Ghana cedi, and this will mean that consumers will not have to pay extra for the price of petrol and diesel beginning today. Our simulations suggest that there will be no increase in the ex-pump price of petrol and diesel in the next window, beginning today, if the levy is imposed,” he stated categorically. The Energy Sector Levies (Amendment) Bill, 2025, has been laid before Parliament with a view to address the mounting challenges facing the energy sector. By adjusting the levies to raise additional revenue, the government aims to support the payment of energy sector arrears, reduce legacy debt, and ensure a stable power supply across the country. The amendment seeks to:

Amend the Energy Sector Levies Act, 2025 to increase the Energy Sector Shortfall and Debt Repayment Levy
Earmark funds for debt repayment and power generation
Ensure a stable energy supply by addressing revenue shortfalls

Table: Energy Sector Debt Breakdown

Debts Owed	Amount
Independent Power Producers (IPPs)	$1.2 billion
State-Owned Enterprises (SOEs)	$800 million
Fuel Suppliers	$400 million
Other Stakeholders	$500 million
Total	$3.1 billion

Quotable Quotes

“Mr Speaker, I repeat, the impact will be absorbed by the gains made from the strong performance of the Ghana cedi, and this will mean that consumers will not have to pay extra for the price of petrol and diesel beginning today. Our simulations suggest that there will be no increase in the ex-pump price of petrol and diesel in the next window, beginning today, if the levy is imposed,”

– Dr. Cassiel Ato Forson, MP for Ajumako-Enyan-Esiam

The Way Forward

The proposed bill aims to bring about a new era of stability and growth to the energy sector. By adjusting the levies, the government aims to ensure a stable power supply, support the payment of energy sector arrears, and reduce legacy debt. As the energy sector continues to face significant challenges, the need for a forward-thinking and proactive approach has never been more pressing.

Action Steps

Next Steps

To implement the proposed bill, the following action steps will be taken:

Referral of the bill to the Finance Committee
Earmarking funds for debt repayment and power generation
Simulations and analyses to ensure the levies do not burden consumers

Action Required from Stakeholders

Stakeholders, including the Ghana National Petroleum Corporation, IPPs, and fuel suppliers, are urged to work collaboratively with the government to implement the proposed bill. This can be achieved through open dialogue, the provision of technical expertise, and a commitment to support the implementation of the bill.

A New Chapter for the Energy Sector

The proposed Energy Sector Levies (Amendment) Bill, 2025, marks a new chapter in the history of the energy sector. By addressing the mounting challenges facing the sector, the government aims to ensure a stable power supply, support the payment of energy sector arrears, and reduce legacy debt. The strong performance of the Ghana cedi provides a positive outlook for consumers, ensuring they do not pay extra for the price of petrol and diesel.

Conclusion

The proposed Energy Sector Levies (Amendment) Bill, 2025, presents an opportunity for the energy sector to address the mounting challenges and embark on a new path of stability and growth. By adjusting the levies, the government can ensure a stable power supply, support the payment of energy sector arrears, and reduce legacy debt. The strong performance of the Ghana cedi mitigates the impact on petroleum prices, allowing consumers to benefit from this proactive approach. The implementation of the proposed bill will be crucial in ushering in a new era of energy efficiency and reducing the energy sector’s debt burden.