ASEC commends Mahama on Energy Focus, urges deeper power aector reforms

The Africa Sustainable Energy Centre (ASEC) has commended John Dramani Mahama for highlighting energy security and climate resilience in his 2026 State of the Nation Address (SONA), but says deeper structural challenges within the energy sector require more decisive action.

In a statement issued on March 5, 2026, the energy policy think tank acknowledged recent macroeconomic improvements but warned that key issues such as high power distribution losses, declining oil revenues, and gaps in Ghana’s carbon market strategy must be urgently addressed.

ASEC recognised the government’s progress in stabilising the economy, noting that inflation had fallen from 54.1 percent to single digits while foreign reserves had increased to about US$13.8 billion.

The organisation also welcomed the settlement of US$1.47 billion in energy sector debts, which previously affected operations of independent power producers (IPPs). However, it cautioned that celebrating the debt settlement too early could overshadow persistent inefficiencies within the power distribution system.

According to ASEC, the Electricity Company of Ghana (ECG) continues to lose up to 32 percent of the power it distributes—its highest loss rate in more than two decades.

“Clearing debt is not the same as fixing the system. Until that loss is stopped through smart metering, concession-based distribution reform, and strict enforcement, every debt settlement will eventually be followed by another round of tariff increases,” the statement noted.

The think tank also pointed out that industries in Ghana pay about US$0.16 per kilowatt-hour for electricity—more than double the rates paid by manufacturers in countries such as Vietnam and China, where electricity costs average around US$0.07 per kilowatt-hour.

ASEC therefore urged the government to prioritise power distribution reforms and introduce an “Independence Tariff,” while also implementing full zero-rating of duties and Value-Added Tax (VAT) on solar panels, inverters, and battery storage systems to support renewable energy adoption.

The organisation also noted that while the SONA referenced infrastructure investment and a National Petroleum Revitalisation Strategy, it did not adequately address the country’s oil production decline. Ghana’s oil output reportedly fell by 15 percent in 2025, with petroleum receipts dropping by 35.7 percent year-on-year as the Jubilee Field and Tweneboa Enyenra Ntomme (TEN) Field continue to mature after years of limited exploration investment.

“The Jubilee and TEN fields are maturing, and a decade of underinvestment in new exploration is now translating into real production and revenue shortfalls,” the statement said.

ASEC warned that major infrastructure projects financed with petroleum revenues—including market construction and agricultural enclave roads—could face funding challenges if the production decline persists.

The think tank welcomed new technical partnerships between the Ghana National Petroleum Corporation (GNPC) and international energy firms Petrobras and Sonatrach, describing the collaborations as a step in the right direction.

However, it called for greater transparency in the licensing regime, raising concerns over the recent award of a major offshore block to a company with limited operational experience—an issue it warned could undermine confidence in Ghana’s petroleum sector.

ASEC therefore urged the government to publish the National Petroleum Revitalisation Strategy for public review.

The organisation also criticised the omission of carbon markets in the SONA, noting that Ghana is currently one of Africa’s most advanced participants in the Article 6.2 framework under the Paris Agreement.

According to the think tank, the abolition of the Emission Tax removes Ghana’s only domestic carbon-pricing tool at a time when global attention to carbon governance is increasing. It also argued that replacing a GH¢1 fuel levy shifts financial pressure onto logistics and agriculture without establishing a clear green revenue pathway.

ASEC therefore called on the Ministry of Finance to develop a domestic climate finance strategy that does not rely solely on international grants and bilateral carbon deals.

The organisation welcomed the allocation of GH¢401 million for the Women’s Development Bank, noting that women in rural communities are often most affected by energy poverty and climate-related challenges.

ASEC said integrating the bank into Ghana’s Green Finance Taxonomy and providing dedicated financing for solar energy, clean cooking technologies, and agro-processing could make it a powerful tool for supporting a just energy transition.

However, the think tank criticised the removal of the 1.5 percent withholding tax on small-scale gold sales, especially at a time when global gold prices have exceeded US$4,100 per troy ounce. It argued that the decision could result in significant revenue losses.

“Reinstating that tax, formalising artisanal mining cooperatives, and redirecting royalties into local green agriculture are structural tools that can change the incentive system for rural communities,” the statement said.

While describing the President’s remarks on illegal mining as among the strongest parts of the address—particularly his pledge to target financiers rather than miners—ASEC cautioned that enforcement measures alone will not be sufficient to address the crisis.