The Minority in Parliament has outlined a three-point strategy to help the government address Ghana’s ballooning energy sector debts, urging President John Mahama’s administration to adopt a more structured, sustainable, and stakeholder-driven approach rather than burdening citizens with what it describes as punitive taxes.
Speaking at a press conference in Accra, the Ranking Member on the Economy and Development Committee, Kojo Oppong Nkrumah, called on government to reconsider its recent introduction of an 8% levy on fuel and instead implement more effective long-term reforms.
“If the government is truly committed to solving the energy sector’s financial problems, it must move beyond taxes and address the structural issues at the root of the debt crisis.”
Renegotiate costly power agreements
The first of the Minority’s proposals is for the government to expedite the renegotiation of existing power purchase agreements (PPAs) and other energy sector contracts that have contributed to the accumulation of liabilities.
“Many of these contracts, especially the take-or-pay agreements, are unsustainable and are at the core of our energy sector debt,” Mr. Oppong Nkrumah said.
“The government must finalize renegotiations it claims to have started to reduce unnecessary capacity payments.”
Industry experts estimate Ghana’s energy sector debt to exceed GH₵80 billion, much of it arising from idle capacity payments to independent power producers (IPPs) under agreements signed without corresponding demand.
Shift to renewable energy
The Minority is also urging government to accelerate Ghana’s transition to renewable energy sources such as solar and wind, arguing that this will reduce the country’s reliance on imported fuels for power generation and consequently lower operational costs.
“We need to dominate our energy mix with renewable solutions,” Mr. Oppong Nkrumah emphasized.
“This shift will reduce our dependence on fossil fuels and the need to purchase fuel for thermal plants, which is a major driver of the current debt.”
He noted that renewable energy is not only more environmentally sustainable but also more cost-efficient in the long term and would help shield Ghana from global oil price volatility.
Restructure financial arrangements with IPPs
The Minority’s third proposal is for the government to urgently engage independent power producers to restructure existing financial arrangements by integrating fuel and capacity charges into power purchase agreements.
The aim is to enable the Public Utilities Regulatory Commission (PURC) to transparently assess and factor justifiable costs into end-user tariffs.
“We propose that government work with IPPs to move these costs into PPAs and then make a case to the PURC for appropriate adjustments to tariffs,” he explained.
According to the Minority, this move would improve planning and pricing across the power sector, protect consumers from sudden shocks, and make the system more predictable for investors and stakeholders.
The Minority’s proposals come in response to mounting public concern over the recently imposed 8% fuel levy, which adds about GH₵1 per litre at the pump. Civil society groups and transport operators have joined the Minority in calling for the levy’s immediate withdrawal.
The Minority has therefore called on government to convene an urgent stakeholder forum, including energy sector players, civil society, and consumer groups, to build consensus on practical and less burdensome strategies to solve the nation’s long-standing energy challenges.
