Ghana’s energy sector has long been a cornerstone of economic development. However, systemic challenges, including chronic power outages—popularly called “dumsor”—mounting debts, aging infrastructure, and policy inconsistencies, have hindered economic growth and quality of life. The recent election of President John Mahama and the National Democratic Congress (NDC) presents a critical opportunity to address these challenges and restore the energy sector to its rightful position as a driver of national progress and economic growth.
The NDC’s 2024 manifesto outlines a bold and comprehensive roadmap to stabilize and transform the energy sector. By focusing on financial restructuring, infrastructure modernization, renewable energy investments, and regulatory reforms, the new government aims to avert an impending energy crisis, stimulate economic growth, and create jobs.
Understanding Ghana’s Energy Challenges
Upon assuming office on the 7th of January 2025, President John Mahama’s administration inherited an energy sector fraught with significant challenges, many stemming from the bad policies and mismanagement of the sector by the immediate past New Patriotic Party (NPP) government. One of the most pressing issues is the sector’s financial instability. The NPP government presided over a substantial increase in debt within the energy sector, exacerbated by long delays in payments for subsidies and services. This financial mismanagement has strained the sector’s ability to maintain operations and invest in necessary infrastructure improvements. Additionally, the previous administration’s failure to secure adequate fuel supplies for power generation has led to a resurgence of power outages, commonly known as “dumsor.” This neglect has disrupted economic activities and daily life across the country, highlighting the urgent need for effective energy sector management.
The lack of transparency and accountability in energy sector agreements during the NPP’s tenure has further compounded the sector’s challenges. These agreements, including the scandalous PDS deal, are believed to be a major source of corruption, undermining the sector’s efficiency and financial health. In response to these challenges, there have been calls for an immediate audit of the energy sector to assess the extent of the issues and implement corrective measures. Such an audit is seen as crucial to restoring the sector’s financial viability and ensuring a reliable power supply for Ghana’s citizens and businesses.
Addressing these inherited challenges will be critical for the Mahama administration as it seeks to stabilize and revitalize Ghana’s energy sector, ensuring it can support the nation’s economic growth and development.
Ghana’s energy challenges therefore stem from several interconnected issues, including:
Financial Deficits: Mounting debts from power generation and distribution companies have strained the sector. Inefficient revenue collection, coupled with misaligned tariffs, exacerbates the financial instability.
Aging Infrastructure: Outdated energy infrastructure contributes to significant transmission losses and unreliable power supply.
Over-Reliance on Fossil Fuels: The country’s dependence on thermal power exposes it to volatile global fuel prices and environmental concerns.
Weak Policy Frameworks: Inconsistent and unclear policies, alongside inadequate regulatory oversight, have deterred private investment and innovation.
Strategic Interventions to Revitalize the Sector
- Financial Restructuring
The NDC plans to implement financial reforms to address the energy sector’s ballooning debts, which have hindered investment and operational efficiency. By renegotiating contracts with Independent Power Producers (IPPs) and enhancing revenue collection through digitization, the government seeks to restore financial health to the sector.
A similar approach was successful in Kenya, where financial restructuring attracted private investments and improved efficiency. Ghana’s energy sector can benefit from adopting these practices, thereby creating a more stable environment for growth.
- Renewable Energy Investments
Recognizing the global shift toward sustainable energy, the NDC aims to increase renewable energy’s share in the energy mix to 30% by 2030. Investments in solar, wind, and mini-hydro projects will diversify Ghana’s energy sources and reduce its carbon footprint.
Renewable energy also offers significant economic benefits. Studies indicate that such investments can drive local manufacturing of solar panels and wind turbines, creating thousands of skilled and semi-skilled jobs. Moreover, renewable energy projects in rural areas can enhance energy access and foster economic activities.
- Infrastructure Modernization
Modernizing Ghana’s energy infrastructure is essential to meet growing demand and reduce inefficiencies. The NDC government proposes upgrading the national grid, integrating smart grid technologies, and expanding access to underserved communities. Such improvements will ensure reliable power supply, crucial for industrial growth and job creation. Infrastructure modernization also facilitates the integration of renewable energy sources and new technologies, further enhancing energy security.
- Policy and Regulatory Reforms
To create a conducive environment for investment and innovation, the NDC intends to implement significant policy reforms. These include empowering an independent Energy Regulatory Commission to oversee tariff reviews and streamline licensing processes to reduce bureaucratic delays. Clear and consistent policies will attract both local and international investors, fostering competition and efficiency within the sector. Public-Private Partnerships (PPPs) need such policy reforms to attract funding for large-scale energy projects.
Job Creation Potential
The proposed interventions are poised to generate employment across various domains:
Renewable Energy: Investments in solar, wind, and hydroelectric projects will create jobs in construction, installation, maintenance, and operations.
Manufacturing and Technology: Local production of renewable energy components and smart meters will boost employment in manufacturing and technology sectors.
Education and Training: Developing a skilled workforce for renewable energy and energy management will open opportunities in education and vocational training.
Rural Electrification Projects: Extending the grid to rural areas will generate jobs in construction, logistics, and service delivery while stimulating local economies.
Global and Regional Context
Ghana’s energy transition aligns with international goals, such as the United Nations’ Sustainable Development Goal 7 (Affordable and Clean Energy). African regional peers, including South Africa and Morocco, have demonstrated how targeted policies and investments in renewable energy can drive economic growth while achieving energy security. South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) has attracted billions in investment and created thousands of jobs. Similarly, Morocco’s Noor Solar Project highlights the potential of large-scale renewable energy projects in transforming energy landscapes. Ghana can adapt these models to its unique context, ensuring sustainable and inclusive growth.
Call to Action
The looming energy crisis is a call for bold and decisive action. The NDC government under President Mahama has outlined a transformative plan to save Ghana’s energy sector from collapse. Implementing these policies will require collaboration among government, private investors, and international partners. Prioritizing financial stability, renewable energy investments, infrastructure modernization, and policy reforms are the best strategies Ghana can adopt to transform its energy sector into a resilient and sustainable engine of economic growth. The successful implementation of these strategies will create jobs, enhance energy security, and position Ghana as a leader in Africa’s energy transition. With the right vision and determination, the new Mahama administration can turn today’s challenges into opportunities for a brighter, greener, and more prosperous future.
Author:
Prince Kassim Senaya Alubankudi
Policy Analyst at UPDI Africa and an International Business Consultant who holds a Global MBA in Energy and Sustainable Businesses.