Ghana's Energy Transition: A Call for Accelerated Shift to Cheaper Fuels
The International Monetary Fund (IMF) is urging Ghana to accelerate its transition to cheaper fuel sources, such as natural gas, to combat rising energy costs and ease financial strain on the power sector. This shift is crucial to reducing the country's overreliance on costly liquid fuels, which continue to deplete foreign exchange reserves and jeopardize the financial stability of power utilities.
The IMF emphasizes that prioritizing gas and other affordable fuels could lead to significant savings and enhance the liquidity of key state-owned enterprises, including the Electricity Company of Ghana (ECG) and the Volta River Authority (VRA).
Dr. Adrian Alter, the IMF's Resident Representative to Ghana, discussed this strategy on Channel One TV's Point of View with Bernard Avle. Dr. Alter highlighted the importance of a clear 'pecking order' in fuel selection, favoring cost-effective options.
He explained that the IMF has consistently advised the government to prioritize cheaper fuels, such as gas, over more expensive liquid fuels. This approach aims to reduce the country's dependency on imported oil, which is a significant contributor to rising generation costs.
Dr. Alter noted that while hydropower accounts for 40-50% of Ghana's energy mix, seasonal variations require a heavier reliance on thermal power, often fueled by imported oil. He stressed that reducing this dependency is essential for stabilizing generation costs and preserving fiscal space.
The ongoing efforts to increase domestic gas production align with the IMF's advice for greater self-sufficiency. Dr. Alter praised the government's strategy to become more self-reliant in gas production, considering it a significant milestone.
He added that successful implementation of this strategy could lead to substantial savings in fuel purchases. However, maintaining momentum on this transition is crucial to achieving a cost-reflective, reliable, and financially sustainable energy supply in Ghana.
