President John Dramani Mahama, earlier today, February 27, presented to Ghanaians his first State of the nation Address (SONA). Key amongst his address in his 2025 State of the Nation Address (SONA), was highlighting was he deemed were major challenges in Ghana’s energy, oil, and gas sector additionally, outlining strategies to restore stability, clear debts, and maximize local energy production. Here are some highlights
Energy Sector in Crisis
President Mahama highlighted that Ghana’s energy sector is struggling under massive debts, inefficient power distribution, and high losses. Key issues include:
- GHS 70 billion total debt in the energy sector, with ECG alone owing GHS 68 billion.
- Unpaid debts to power producers and fuel suppliers, leading to supply disruptions.
- ECG’s commercial losses exceeding 30%, worsening revenue collection.
- Illegal power connections causing major financial leakages.
- Non-payment of energy sector bonds, worsening the liquidity crisis.
Measures to Stabilize Power Supply
While, the President waded into allegations his tenure as President has always been accompanied by protracted power outages, (Dumsor) President Mahama threw a challenge to his naysayers, insisting between January 2016 and January 2027, his government did not ration any power.
The President, however admitted recent challenges and threats to electricity supply and outlined some measures to ensure uninterrupted electricity supply, including;
- Emergency procurement of fuel to sustain electricity generation.
- Fast-tracking maintenance on the West African Gas Pipeline (WAPCo) to improve gas supply by March 2025.
- Strict enforcement of the Cash Waterfall Mechanism (CWM) to ensure fair revenue distribution to power producers.
Long-Term Energy Sector Reforms
The President also announced comprehensive reforms to improve efficiency, cut costs, and stabilize power supply:
- Transitioning to 100% gas-powered electricity generation, reducing reliance on crude oil.
- Establishing a Renewable Energy & Green Transition Fund to support solar, wind, and electric vehicle infrastructure.
- Engaging the private sector in ECG metering and billing operations to curb financial losses.
- Introducing prepaid smart metering systems to eliminate illegal connections and improve revenue collection.
- Completing stalled power projects to increase generation capacity.
Oil and Gas Sector Reforms
The Oil and Gas sector particularly the upstream have also in recent times caught global attention over concerns of “needless” litigations. President Mahama who attributes challenges in Ghana’s oil and gas sector, to mismanagement of petroleum revenue, underutilization of local gas, and rising fuel import costs also outlined plans to revamp the sector whose state he deems to be sore.
- Boost local oil production by attracting investment into Ghana’s offshore fields.
- Expand domestic gas processing capacity to reduce LNG imports.
- Prioritize Ghana’s own gas for power generation, cutting expensive crude oil imports.
- Ensure GNPC and other state-owned oil companies operate transparently and efficiently.
- Review petroleum pricing mechanisms to stabilize fuel prices and reduce inflationary pressure.
- Strengthen local content policies to increase Ghanaian participation in the oil and gas sector.
Reducing Fuel Prices & Cutting Import Dependence
To reduce reliance on imported refined petroleum and stabilize fuel prices, the government says it will:
- Expand local refinery capacity to reducing dependence on imported fuel.
- Restructure and revive Tema Oil Refinery (TOR) to process more crude oil locally.
- Invest in alternative fuel sources, including biofuels and compressed natural gas (CNG) for transportation.
- Increase fuel storage reserves to cushion against global oil price fluctuations.
President Mahama summarily reaffirmed his administration’s commitment to reducing electricity tariffs and fuel prices through better management of local resources.
