Ghana to enforce strict SOE reforms to curb rising energy sector debt – Ato Forson

The government has approved a series of far-reaching structural reforms targeting state-owned enterprises (SOEs) as part of efforts to restore fiscal stability and address Ghana’s growing energy sector debt burden.

Speaking in an interview with Bloomberg during The Africa Debate conference in London, Finance Minister Cassiel Ato Forson warned that Ghana's energy sector liabilities could double by 2027 if urgent corrective measures are not implemented.

According to the Finance Minister, the rising debt burden has become a significant threat to the country's economic recovery efforts and is increasingly influencing investor confidence and international market perceptions.

Dr. Forson explained that the challenges facing the energy sector go beyond electricity tariffs, pointing instead to deep-rooted operational inefficiencies, particularly within the power distribution chain.

"The problem is not just tariffs. The inefficiencies, especially in the distribution sector, are being passed on to the ordinary Ghanaian, making electricity costs unnecessarily high," he stated.

He noted that the energy sector remains Ghana's largest source of contingent liabilities and continues to pose a major fiscal risk to the economy.

"The energy sector debt remains the largest among Ghana's liabilities and continues to pose a major risk. The magnitude of the shortfall surpasses Ghana's domestic capital expenditure and must be treated with urgency," Dr. Forson said.

As part of efforts to reverse the trend, the government is pursuing a combination of corporate governance reforms and increased private sector participation in key state-owned enterprises, particularly loss-making entities such as the Electricity Company of Ghana.

The Finance Minister revealed that Cabinet has approved private sector involvement in the power distribution sector as part of a broader strategy to improve efficiency, strengthen financial discipline, reduce operational losses and enhance accountability.

"Cabinet has approved private sector participation as part of government's strategy to revive the sector," he disclosed.

Dr. Forson stressed that immediate action is necessary to prevent the worsening debt situation from undermining Ghana's economic recovery and development agenda.

"Time is of the essence. We must act quickly if we are to prevent further damage to our economy and improve the lives of Ghanaians," he added.

The planned reforms form part of the government's broader strategy to address structural weaknesses in state-owned enterprises, improve public sector efficiency and place the energy sector on a more sustainable financial path.