Benjamin Boakye, Executive Director of the Africa Centre for Energy Policy (ACEPA), has warned that Ghana’s domestic upstream petroleum industry could lose up to US$2 billion in potential investment in 2025 without swift reforms. He attributes this risk to declining investor confidence stemming from years of political interference. Mr. Boakye expressed hope that decisive action by the incoming government could attract this level of investment. His statement, issued to congratulate President-elect John Mahama, emphasized that without rapid reform, the sector faces this significant financial loss.
Ghana’s crude oil production has fallen from 71.44 million barrels in 2019 to 48.25 million barrels in 2023, with the exception of a production increase in the first half of 2024. This represents an average annual decline of 9.2 percent over the past four years and a 7 percent drop from 2022 levels. This downturn is linked to unfavorable fiscal terms that deter investors from exploring new hydrocarbon resources.
Beyond upstream challenges, Mr. Boakye highlighted numerous critical issues within the broader energy sector demanding immediate attention. He cited institutional inefficiencies, including bloated structures and redundant directorates resulting from political appointments, leading to wasteful spending and bureaucratic inefficiencies.
He specifically pointed to mismanagement at the Electricity Company of Ghana (ECG), rendering it reliant on the national budget. Further issues, such as procurement abuse and exchange rate manipulation, have strained ECG finances, affecting payments to the gas sector and discouraging investment in upstream oil and gas. Mr. Boakye also indicated that ACEP will soon release a report detailing inefficiencies within the downstream petroleum sector, including inflated margins increasing public costs. Additionally, he called for reforms in institutions like the Tema Oil Refinery (TOR), the National Petroleum Authority (NPA), and the Bulk Oil Storage and Transportation Company (BOST).
To address these challenges, Mr. Boakye urged President-elect Mahama to prioritize energy sector reforms, recommending a comprehensive audit of sector debt before his January 7th inauguration. He advocated for transparency, efficiency, and decisive action to stabilize the sector, stating, “This situation demands a careful, surgical examination to ensure you hit the ground running on January 7.” ACEP pledged its support in developing policy recommendations for the new government.
Analysts believe that effectively addressing these energy sector challenges could significantly impact Ghana’s economic stability and energy security. Moreover, the incoming administration’s approach to energy sector reform is anticipated to be a crucial indicator of its commitment to restoring public confidence and promoting sustainable economic growth, as President Mahama’s inauguration is scheduled for January 7, 2025.
