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Ghana’s energy sector debt has skyrocketed to $3 billion, according to Energy Minister-designate John Jinapor, who attributed the surge to poor management and compounding interest on existing liabilities. Mr. Jinapor made this revelation during his vetting before Parliament’s Appointments Committee on Monday, January 13, 2025.
Tracing the trajectory of the energy sector’s debt, Mr. Jinapor clarified that when the NDC government left office in 2017, the validated debt stood at $2.1 billion. He cited the Energy Sector Debts and Lenders Summary through August 31, 2017, audited by ESLA PLC, which pegged the consolidated liabilities at GH₵9.4 billion, using an exchange rate of 4.4 at the time.
“When we were leaving office, the consolidated debt was close to 2 billion. The validated debt, as per the official public record and approved by Parliament, was $2.1 billion,” he explained. He also refuted earlier claims that the debt was as high as $5 billion during the transition period.
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However, by September 2024, the debt had risen to $2.5 billion, and after further reconciliation with the Ministry of Energy, the Energy Commission, and the Electricity Company of Ghana (ECG), it had reached $3 billion.
Mr. Jinapor pointed to the Energy Sector Levies Act (ESLA), which has generated approximately GH₵45 billion since its inception, as a key instrument in managing the sector’s financial challenges. However, he expressed concerns about its implementation and utilisation.
“While ESLA funds have been used to service part of the principal and interest of the sector’s debt, these amounts have proven insufficient to offset the growing liabilities,” he stated.
The minister-designate underscored that ineffective debt management practices, coupled with a lack of strategic planning, have allowed the debt to spiral, placing further pressure on Ghana’s energy infrastructure.
Mr. Jinapor stressed the need for urgent reforms to address the mounting debt and improve financial stability within the energy sector. He advocated for a comprehensive review of energy policies, better financial controls, and efficient allocation of resources to reduce waste.
“As we speak today, the reconciled figure from official sources is $3 billion,” he emphasised, calling for immediate measures to curb further debt accumulation.
The rapid growth in energy sector debt has raised concerns about its potential impact on Ghana’s economy, especially given the reliance on energy for industrial and domestic consumption. Rising liabilities could lead to higher tariffs, reduced investments in the sector, and a strain on public finances.
With his confirmation as energy minister still pending, Mr. Jinapor has promised to work towards implementing robust measures to stabilise the sector and ensure transparency in its financial management.
