February 10, 2025

John Jinapor: Energy Sector Debt Soars to $3 Billion

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John Jinapor

John Jinapor, the Energy Minister-designate of Ghana, has revealed that the debt within the country’s energy sector has escalated to a staggering $3 billion. Speaking during his vetting session before Parliament’s Appointments Committee on Monday, January 13, 2025, he expressed grave concern over the rapid increase in the sector’s liabilities. He attributed the growing debt to poor management and the rising interest on existing obligations.

Jinapor provided a detailed overview of the energy sector’s debt, referring to a report from the previous administration. He explained that when the previous government left office, the total consolidated debt in the sector was close to $2 billion. Referring to an official document summarizing the energy sector’s debts and its various lenders, Jinapor said, “The total energy sector liability was GH₵9.4 billion. Using an exchange rate of 4.4, this was equivalent to about $2.1 billion.” He clarified that this was the officially validated figure at the time, supported by audits carried out by the Energy Sector Levies Act (ESLA) PLC.

Jinapor further addressed claims that the sector’s debt had ballooned to $5 billion, strongly rejecting them. He explained that the official validated public record, confirmed by Parliament, pegged the debt at $2.1 billion at that time. He added that this figure was accurate according to the data that had been available when he served as the chairman of the energy subcommittee in the transition team.

However, the picture has dramatically changed since then. Jinapor disclosed that by September 30, 2024, the energy sector’s debt had grown to $2.5 billion. This figure was further revised upwards following a reconciliation meeting held with various key institutions, including the Ministry of Energy, the Energy Commission, and the Electricity Company of Ghana (ECG). The final figures confirmed that the sector’s debt had ballooned to an alarming $3 billion, a rise that has generated significant concern regarding the fiscal health and sustainability of Ghana’s energy sector.

The sharp rise in the energy sector’s debt presents a major challenge for the new administration, which will be expected to manage and address the mounting financial strain. The increasing debt, coupled with the challenges of rising interest payments, poses serious risks to the energy sector’s ability to function efficiently, provide services, and maintain infrastructure. Jinapor’s statement underscores the need for swift and strategic interventions to prevent further escalation of the debt.

As the newly appointed Minister-designate, Jinapor acknowledged that addressing this issue would be one of his primary responsibilities. He emphasized that any efforts to reform and stabilize the sector would require close collaboration between the government, energy stakeholders, and key players in the industry. There will also need to be careful attention to managing the interest payments on the debt, alongside effective fiscal policies to ensure that the energy sector does not become a further drain on the country’s financial resources.

The revelation of the $3 billion debt is a wake-up call for Ghana’s policymakers, highlighting the urgent need for a comprehensive and sustainable solution to the sector’s financial woes. It will be crucial for the new administration to demonstrate strong leadership in tackling the debt while also ensuring that the energy sector remains a reliable and viable source of power for the country.

With the energy sector debt now at an unsustainable level, Jinapor’s next steps will involve working with various ministries and agencies to review the sector’s financial structure and identify key areas where cost-saving measures and debt-reduction strategies can be implemented. The financial health of Ghana’s energy sector will undoubtedly be a top priority for the incoming administration, and Jinapor’s leadership will be pivotal in steering the sector toward fiscal sustainability and long-term growth.

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