ASEC commends Mahama’s energy focus in SONA but calls for deeper structural reforms

The Africa Sustainable Energy Centre (ASEC) has commended President John Dramani Mahama’s emphasis on energy security and climate resilience in his 2026 State of the Nation Address (SONA) but stressed that the persistent structural challenges in the energy sector demand more aggressive action.

In a statement, the energy policy think tank warned that distribution losses, oil revenue decline and carbon market strategy require urgent attention despite macroeconomic gains while acknowledging government’s success in stabilising the Ghanaian economy, bringing inflation down from 54.1 percent to single digits and rebuilding foreign reserves to US$13.8billion.

It also praised the settlement of US$1.47billion of the energy sector debts, which it said had paralysed independent power producers (IPPs). However, ASEC warned that early celebration of the debt settlement risks masking deeper inefficiencies in the power distribution system, stressing the Electricity Company of Ghana (ECG) “continues to lose up to 32 percent of all power it distributes – the highest rate in more than two decades”.

“Clearing debt is not the same as fixing the system. Until that loss is stopped through smart metring, concession-based distribution reform and serious enforcement, every debt settlement will be followed by another round of tariff increases,” a portion of the statement read.

According to ASEC, industry currently pays about US$0.16 per kilowatt-hour, more than double the rates paid by manufacturers in Vietnam and China, where electricity costs hover near US$0.07 per kilowatt-hour – a disadvantage the SONA did not address.

ASEC is, therefore, urging the government to place distribution reforms at the centre of its power sector agenda and introduce what it termed an “Independence Tariff” – the full zero-rating of duties and Value-Added Tax (VAT) on solar panels, inverters and battery storage.

ASEC noted that while the address referenced infrastructure investment and a National Petroleum Revitalisation Strategy, it omitted the production deficit. Ghana’s oil production fell by 15 percent in 2025, with petroleum receipts dropping by 35.7 percent year-on-year as the Jubilee and TEN fields mature and underinvestment in exploration.

“The Jubilee and TEN fields are maturing, and a decade of underinvestment in new exploration is now showing up as a real production and revenue shortfall,” the statement said. “Infrastructure programmes funded by oil money, including major market construction and agricultural enclave roads, are at genuine risk if this trajectory is not reversed.”

The think tank also welcomed the Ghana National Petroleum Corporation’s new technical partnerships with Petrobras and Sonatrach, describing them as “the right instinct.” However, it called for transparent licensing regime, expressing concern over “the recent award of a major offshore block to a company with a thin operational record” – a situation it described as “exactly the kind of opacity that has set Ghana back before.”

ASEC, therefore, called on the government to publish the National Petroleum Revitalisation Strategy for public review. It identified the failure to address carbon markets in the recent SONA, noting that Ghana is “quietly Africa’s most advanced operator in the Article 6.2 framework under the Paris Agreement.”

The statement noted “the abolition of the Emission Tax removes Ghana’s only domestic carbon-pricing tool at a time when the world is paying closer attention to carbon governance.” The replacement of a GH¢1 fuel levy, ASEC said, “shifts the burden onto logistics and agriculture without providing a credible green revenue pathway.”

ASEC called on the Ministry of Finance to develop a domestic climate finance strategy independent of international grants and bilateral carbon deals.

The organisation welcomed the GH¢401million allocated for the Women’s Development Bank, noting that women in rural Ghana “bear the sharpest edges of energy poverty and climate change.” It said if the institution is properly integrated into the Green Finance Taxonomy with dedicated lending for solar, clean cooking and agro-processing, it “can be one of the most effective tools for a just energy transition that the government has launched in years.”

However, ASEC noted that the removal of the 1.5 percent withholding tax on small-scale gold sales, at a time when gold prices exceeded US$4,100 per troy ounce, “resulted in a significant revenue loss that the address did not account for.”

“Reinstating that tax, formalising artisanal mining cooperatives and redirecting royalties into local green agriculture are the kinds of structural tools that can actually change the incentive structure for rural communities,” the statement said.

While describing the President’s language on illegal mining as “some of the strongest in the address,” particularly his pledge to target financiers rather than miners, ASEC cautioned that enforcement alone cannot solve the crisis.

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