Years of accumulating debt, under-recovery of costs, and the rising cost of fuel procurement have created a fiscal and operational emergency that threatens the stability of the national electricity supply.
The current energy sector indebtedness—exceeding $3.1 billion—combined with unmet obligations to Independent Power Producers (IPPs), fuel suppliers, and guarantee institutions, has placed an unsustainable burden on the public purse.
Left unaddressed, these challenges could precipitate a full-blown power crisis with dire consequences for businesses, households, and economic growth.
In view of this, government is taking decisive action to safeguard the integrity of the power sector and ensure uninterrupted supply.
The proposed Energy Sector Levies (Amendment) Bill, 2025, seeks to revise the Energy Sector Shortfall and Debt Repayment Levy to mobilise critical resources for settling outstanding obligations, restoring essential guarantees, and funding the procurement of liquid fuel for power generation.
Importantly, the proposed adjustments have been carefully calibrated to avoid increases in the pump prices of petrol and diesel and will be implemented in a manner that protects industry and households from further economic strain.
The proceeds will be ring-fenced to serve as a dedicated funding stream for stabilising the power sector and preventing further accumulation of debt.
This amendment is both urgent and necessary to preserve Ghana’s energy security, enhance investor confidence in the sector, and support sustainable growth.
The memorandum that follows outlines the rationale, implications, and strategic intent behind the proposed legislative amendment.
Read the Full Memo Below:
ENERGY SECTOR LEVIES (AMENDMENT) BILL, 2025
MEMORANDUM
The object of the Bill is to amend the Energy Sector Levies Act, 2025 (Act 1135), to increase the rate of the Energy Sector Shortfall and Debt Repayment Levy in order to raise additional revenue to support the payment of energy sector shortfalls, reduce legacy debts, and stabilise power supply.
The power sector is the biggest economic and fiscal risk presently faced by the country. If not addressed, this could lead to a major crisis.
The challenges in the energy sector are enormous, stemming from debt accumulation, shortfalls, insufficient gas supply, and inefficiencies.
As of the end of March 2025, total energy sector debt stands at $3.1 billion. This includes amounts owed to independent power producers, state-owned enterprises, and fuel suppliers.
Due to non-payment of bills owed to ENI and Karpower, the World Bank’s International Development Association guarantee of $512 million and the Ghana National Petroleum Corporation guarantee of $120 million have been completely drawn down.
As a result, government is now required to find an additional $632 million to restore these guarantees.
In addition, a minimum of $3.7 billion is needed to clean up the broader energy sector indebtedness.
The electricity sector has also undergone a significant shift over the years, with the country now heavily reliant on thermal power generation to supplement hydroelectric sources.
The cost of liquid fuel to power thermal plants is not included in the current electricity tariff build-up, resulting in a significant revenue shortfall for fuel procurement.
According to the Public Utilities Regulatory Commission (PURC), including this cost in the tariff structure would lead to an increase in electricity tariffs by over 50 percent.
Government considers such an increase too detrimental to industry and household incomes.
To avoid this, government will require $1.2 billion in 2025 for liquid fuel procurement for power generation alone.
The power sector risks imminent collapse if these unsustainable shortfalls are not resolved—especially given that the current fiscal policy cannot accommodate the financial demands of the sector.
To raise the needed revenue, government is proposing an increase in the Energy Sector Shortfall and Debt Repayment Levy.
The impact will be absorbed by the gains made from the strong performance of the cedi. As a result, there will be no increase in the ex-pump prices of petrol and diesel in the next pricing window, even with the levy increase.
The levy will serve as a dedicated funding source for the energy sector, with proceeds earmarked specifically for procuring liquid fuel for power generation—since current electricity tariffs do not cover this cost.
The decision to increase the levy on petroleum prices balances the need for a stable power supply with the goal of ensuring the sector’s financial sustainability.
The Bill, therefore, seeks to amend the Schedule to Act 1135 to increase the Energy Sector Shortfall and Debt Repayment Levy, augment the Energy Sector Support Account, and ensure the availability of fuel for backup generation.