Accra, Ghana – February 27, 2025 – Sweet Melodies FM – In a worrying development outlined during his State of the Nation Address, President John Dramani Mahama revealed that Ghana is facing an escalating energy crisis, as Independent Power Producers (IPPs) threaten to cease operations due to an outstanding GHS 70 billion debt owed by the government.
IPPs’ Financial Strain
The President acknowledged that the energy sector’s financial instability has reached a critical point, with IPPs expressing their inability to continue operations unless the government addresses the mounting debt owed to them. These independent producers supply a substantial portion of Ghana’s electricity, and any disruption to their operations could have devastating consequences for the country’s energy supply.
“The energy sector is at a crossroads. The government owes the IPPs a staggering amount of money, and if we do not act swiftly, we risk significant disruptions to power generation across the country,” Mahama stated.
Immediate Reforms for Stability
In response to the crisis, President Mahama announced a series of reforms aimed at stabilizing the energy sector and ensuring the continued operation of IPPs. Key among these reforms is the implementation of the Cash Waterfall Mechanism, which will prioritize payments to the most critical service providers in the energy sector.
“We are committed to resolving this issue and ensuring that the Cash Waterfall Mechanism is fully enforced to protect the integrity of the sector and prevent further disruptions,” Mahama added.
The mechanism is expected to improve the flow of payments, ensuring that IPPs are compensated on time and that debt accumulation is kept under control.
Transition to Gas and Renewables
As part of a longer-term strategy to mitigate the country’s energy crisis, Mahama announced plans to transition Ghana’s energy production to 100% gas utilization for power generation. This shift will reduce reliance on expensive imported oil and promote greater energy security for the country.
Furthermore, the government will focus on expanding renewable energy sources, such as solar and wind power, as part of its broader commitment to sustainable energy. Mahama emphasized that these changes will be backed by the establishment of a Renewable Energy and Green Transition Fund, which will support the development of clean energy technologies.
“We must build a future that is not only energy-efficient but also sustainable. By investing in gas and renewable energy, we will secure Ghana’s energy needs for generations to come,” the President said.
Government’s Commitment to Energy Sector Reform
While the immediate priority is addressing the debt crisis, Mahama reiterated that the government remains committed to long-term reforms aimed at improving the financial viability of the energy sector. These reforms will include reducing commercial losses in the system and ensuring that the cost of electricity is fairly distributed among consumers.
“We understand the challenges faced by our energy sector, and we are taking decisive steps to ensure its long-term stability and growth,” Mahama assured.
Call for National Support
In his closing remarks, Mahama called on Ghanaians to be patient as the government works to resolve the energy crisis. He also urged businesses, civil society, and industry stakeholders to support the reforms and cooperate in creating a more resilient energy sector.
“The road ahead may be difficult, but with collective effort, we will overcome this crisis and build a more sustainable energy future for Ghana,” he concluded.
As the situation develops, Sweet Melodies FM will continue to monitor and provide updates on the energy crisis, the government’s interventions, and any impacts on the nation’s power supply.
