SBM: Power outages cost Ghana over $680mn yearly

Ghana is facing a dire energy crisis that has severe implications for its economy and citizens. The term 'Dumso,' which means off and on, is used to describe the power situation in the country. Isaac Kofi Agyei, an analyst at SBM Intelligence, sheds light on the key findings of a recent report that highlights the root causes of Ghana's energy woes. According to Agyei, the energy sector in Ghana is a 'debt-making machine,' generating over $1 billion in debt annually, with a significant portion stemming from excess capacity. The country's reliance on thermal power plants, fueled by imported gas, has further exacerbated the situation. The mismatch between revenue collection in local currency and debt obligations in foreign currency has led to financial instability in the sector. As a result, Ghana is currently grappling with a staggering debt of close to $2 billion. To address these challenges, Agyei emphasizes the need to upgrade infrastructure, diversify energy sources, and strengthen grid resilience. However, he points out that the road to recovery will require concerted efforts and strategic interventions. A recent initiative by the Ghanaian government, known as the cash waterfall mechanism, aims to streamline payments within the energy value chain. Despite its noble intentions, the mechanism has faced hurdles due to liquidity constraints and currency fluctuations. Moving forward, Ghana must navigate a complex web of financial obligations, operational challenges, and policy reforms to achieve a sustainable and reliable energy sector. One key area of concern is the electricity tariff regime, which plays a crucial role in addressing the sector's financial viability. Implementing cost-reflective tariffs could help mitigate debts and ensure a more stable energy landscape for the country. As Ghana grapples with its energy crisis, stakeholders will need to collaborate closely to chart a path towards long-term energy security and economic growth. The challenges are daunting, but with strategic planning and decisive actions, Ghana can overcome its energy woes and pave the way for a brighter future.