The Africa Sustainable Energy Centre has raised critical concerns following a detailed analysis of the 2026 Budget Statement and Economic Policy, warning that structural weaknesses in the energy sector could endanger Ghana’s fiscal recovery.
The Africa Sustainable Energy Centre (ASEC) released its assessment after Finance Minister Cassiel Ato Forson presented the budget themed “Resetting for Growth, Jobs, and Economic Transformation” on 13 November 2025. While praising macroeconomic stability gains, the think tank cautions that these achievements rest on a fragile foundation.
The government has achieved significant improvements including a dramatic decline in public debt, a Cedi appreciation of nearly 35 percent, and a primary balance surplus of 1.6 percent of Gross Domestic Product (GDP). Successful debt renegotiations have saved over 250 million US dollars, and enforcement of the Cash Waterfall Mechanism (CWM) has boosted the Electricity Company of Ghana’s (ECG) monthly revenue from 900 million cedis to 1.7 billion cedis.
However, ASEC warns that the budget fails to confront systemic inefficiencies within the power sector. The organization identified four critical loopholes that threaten to undermine fiscal stability.
The 2026 Budget commits 20 billion cedis to the energy sector, allocating 15.2 billion cedis for energy sector shortfall payments and 4.8 billion cedis for legacy Independent Power Producer (IPP) debt. While legacy debt service is necessary, ASEC expresses concern that the massive shortfall allocation lacks explicit, time bound performance targets for reducing Technical and Commercial losses, the primary driver of the deficit.
“Without linking funding to measurable ECG reforms, the budget risks entrenching an annual subsidy rather than incentivising lasting efficiency,” the organization stated in its analysis. The absence of accountability mechanisms could transform what should be temporary support into permanent fiscal burden.
ASEC also warns that the proposal to revise the investment policy of the Ghana Petroleum Funds poses a serious fiscal threat. The proposed changes would allow domestic investment in commercial state owned energy projects, potentially compromising funds currently held in US Dollars that act as external stabilizers against commodity shocks and currency depreciation.
“Diverting them into the high risk domestic energy sector compromises their mandate and exposes Ghana’s sovereign wealth to undue commercial risk,” the organization argued. The think tank stressed that petroleum funds should maintain their role as fiscal buffers rather than becoming development finance vehicles.
The government’s plan to begin constructing a 1,200 megawatt (MW) thermal plant in 2026 drew particular scrutiny. ASEC characterizes this as risking repetition of the historical error that created over 1.4 billion US dollars in legacy capacity payments: building generation ahead of demand and distribution efficiency.
The organization stresses that without reducing Technical and Commercial losses and improving power evacuation capacity, additional generation will deepen fiscal liabilities rather than solve structural issues. Ghana currently faces challenges evacuating power from existing plants due to transmission and distribution constraints.
ASEC also notes alarming underuse of the Annual Budget Funding Amount (ABFA) from petroleum revenues. As of September 2025, only 0.43 percent of the 290 million US dollars available had been utilized. This execution gap undermines growth, delays critical infrastructure under the 30 billion cedis Big Push Programme, and weakens confidence in the government’s ability to translate revenue into development outcomes.
The think tank proposes several corrective measures. ASEC recommends tying the 15.2 billion cedis shortfall allocation to measurable quarterly Technical and Commercial loss reduction targets, ensuring funding drives reforms rather than subsidizes inefficiencies.
The organization also calls for accelerating the Private Sector Participation process for ECG from the third quarter of 2026 to the first half of the year. Transferring commercial risk to a private operator is essential to eliminate persistent shortfalls, according to ASEC.
Additionally, the think tank urges maintaining the Ghana Petroleum Funds’ mandate as external fiscal buffers, keeping investments limited to low risk, foreign denominated assets in line with the Petroleum Revenue Management Act. ASEC also recommends commissioning an independent Capacity Needs Assessment before committing to the 1,200 MW thermal plant.
The organization emphasizes that prioritizing investment in transmission, distribution, and system efficiency would maximize value from existing generation assets rather than adding capacity the system cannot effectively utilize. Whether policymakers heed these warnings could determine whether Ghana’s economic recovery proves sustainable or falters under energy sector pressures.
