Energy sector debt remains significant fiscal burden; government should renegotiate power agreements – PwC

Professional services firm, PwC, has warned that the energy sector debt levy remains a significant fiscal burden due to inefficiencies and escalating debt levels.

According to its analysis of the 2025 Budget, the government should be encouraged to renegotiate the Power Purchase Agreements (PPAs) to reduce fixed capacity and operational charges, alleviating financial pressures and ensure long term sustainability.

The renegotiation, it added, should adhere to applicable PPSs, and if nine exist the government should approach the renegotiation cooperatively.

Moreover, addressing the operational challenges faced by the country’s power distributors – Electricity Company of Ghana (ECG) and Northern Electricity Distribution Company (NEDCo) – is crucial.

It stressed that enhancing collection processes will help generate the necessary funds to reduce the debt owed to the IPPs and other stakeholders.

Meanwhile, PwC, has welcomed the proposed construction of a new gas project management, saying, it will be crucial to prevent delays, cost overruns and operational challenges.

On Environmental, Social and Governance, the government plans to abolish the emissions levy on industries and vehicles, reducing the tax burden on citizens.

PwC said the removal of the levy could potentially undermine climate sustainability commitments.

Nonetheless, the allocation of GH¢242.5 million for victims of the Akosombo dam spillage and GH¢200 million for tidal wave disaster victims in Ketu South to support resettlement, infrastructure repairs, and economic recovery, reflects the administration commitment to social sustainability.