2 weeks Ago By News Ghana
News Ghana, Latest Updates and Breaking News of Ghana, News Ghana, https://newsghana.com.gh/ghana-seeks-competitive-energy-bidding-to-address-us2-billion-sector-deficit/Ghana’s government has submitted a legislative proposal to Parliament aimed at overhauling how the country procures power, part of broader efforts to stabilize an energy sector described as the nation’s most pressing economic threat.
Finance Minister Dr. Cassiel Ato Forson announced the draft law during a World Bank event tied to its Mission 300 Energy Compact, framing it as a critical step to curb financial losses and protect consumers from bearing the cost of inefficiencies.The Legislative Instrument (LI) would mandate competitive bidding for all future power generation contracts, a shift the government claims will enhance transparency, curb inflated costs, and attract higher-quality investments.
Ghana’s energy sector currently faces a $2 billion financial shortfall, driven partly by mismanagement and technical losses in electricity distribution. The state-owned Electricity Company of Ghana (ECG) alone accounts for nearly half the deficit—a gap Dr. Forson argued could be halved if the distributor addressed operational flaws.
“ECG’s inefficiencies cannot continue to be passed on to consumers,” he said, stressing that households and businesses are unfairly shouldering costs through tariffs. The proposed reforms, he added, signal the government’s resolve to “solve deep-rooted challenges” that have long plagued power procurement, including non-competitive deals blamed for excess capacity payments.Ghana’s energy sector debts, largely tied to legacy power purchase agreements, have strained public finances for years.
The new LI seeks to prevent further accumulation by requiring open bidding, a practice already adopted by peers like Kenya and Senegal to lower costs. Dr. Forson urged swift parliamentary approval, warning delays would exacerbate fiscal risks.
“Time is of the essence,” he stated.The initiative coincides with rising scrutiny of Africa’s energy financing models. While Ghana has expanded electricity access to 88% of its population a regional success chronic financial instability in the sector remains a hurdle.
Analysts note the LI’s success hinges on enforcement, given past struggles to rein in non-performing contracts. Meanwhile, consumer groups warn that without parallel reforms to reduce distribution losses, which exceed 20% in some regions, tariff pressures may persist despite the new procurement rules.The World Bank-backed Energy Compact, which includes targets to improve sector liquidity and governance, is expected to support the LI’s implementation.
The Bank has yet to comment on the draft law. News Ghana, Latest Updates and Breaking News of Ghana, News Ghana, https://newsghana.com.
gh/ghana-seeks-competitive-energy-bidding-to-address-us2-billion-sector-deficit/.
