Ato Forson presents bill to increase Energy Sector Levy to address mounting energy sector debt
Finance Minister and Ajumako-Enyan-Esiam MP, Dr. Cassiel Ato Forson, has introduced a bill in Parliament aimed at restructuring the country’s approach to energy sector financing.
Known as the Energy Sector Levies (Amendment) Bill, 2025, the proposed legislation seeks to adjust the existing Energy Sector Shortfall and Debt Repayment Levy to generate more revenue to manage ballooning arrears, legacy debt, and ensure consistent electricity supply nationwide.
The bill was presented under a certificate of urgency and has already passed its first reading. It is now before the Finance Committee for review and recommendations.
Justifying the move, Dr. Forson described the energy sector as Ghana’s most pressing fiscal and economic vulnerability, cautioning Parliament about the risk of a broader financial crisis if the current challenges remain unresolved.
“The total energy sector debt as at the end of March 2025 stands at $3.1 billion. This amount includes debts owed to Independent Power Producers (IPPs), State-Owned Enterprises (SOEs), fuel suppliers, and other stakeholders,” he said.
He pointed to severe financial consequences already suffered due to the government's inability to meet its commitments to energy partners such as ENI and Karpowership.
According to him, these failures led to the full drawdown of two critical guarantees last year—a $512 million IDA guarantee from the World Bank and a $120 million facility from the Ghana National Petroleum Corporation (GNPC).
To restore those guarantees, Dr. Forson noted, the government would need to mobilize $632 million. More broadly, he estimated that at least $3.7 billion would be necessary to reset the energy sector on a sustainable footing.
He explained that Ghana’s electricity generation has become increasingly reliant on thermal sources due to limitations with hydropower. However, the cost of liquid fuel used for thermal generation is not currently reflected in consumer electricity tariffs—causing significant shortfalls in revenue.
Factoring these costs into tariffs, Dr. Forson warned, would lead to steep price increases that would hit consumers hard.
“Including fuel costs in the current electricity pricing structure could lead to a 50 per cent hike in tariffs, which would significantly burden households and businesses,” he revealed.
To avoid that scenario, he argued that the proposed levy adjustment offers a more practical and balanced solution.
“This levy will serve as a dedicated source of funding to the power sector, and the proceeds will be earmarked for the procurement of essential fuel for power generation,” he said.
He further assured lawmakers that the levy would not lead to an immediate increase in fuel prices, thanks to the stabilising effect of a stronger national currency.
"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 bill, if passed, could mark a major policy shift in how Ghana finances its power sector, with government banking on targeted levies rather than price hikes to manage long-standing structural weaknesses.