IMF-backed reforms must tackle Ghana’s long-running energy crisis – Prof. Bokpin warns

Renowned economist Professor Godfred Bokpin has called for more transparency, inclusive dialogues, and a clear role for private entities in Ghana's electricity distribution sector. He warned that ongoing issues within the energy sector pose a significant threat to the country's fiscal stability, regardless of the ongoing IMF-backed reforms.

Speaking on JoyNews' Newsfile, Prof. Bokpin highlighted problems like high distribution losses, weak revenue collection, outstanding debts to power producers, and the financial strain on the state, all of which existed before the IMF programme. He acknowledged the programme's contribution to increased transparency and better functioning mechanisms to distribute revenues across the sector. However, he emphasized that the core issues have been ongoing for years, predating the IMF support.

Prof. Bokpin stressed that the focus should be on measuring progress rather than simply critiquing the data used to assess the sector's financial state. He highlighted the benefits of improved transparency due to the IMF-supported reforms, particularly in understanding the extent of losses and tracking progress. He pointed to the cash waterfall mechanism as an area where the IMF programme has positively impacted, although it is still functioning partially.

Despite some progress, Prof. Bokpin warned that the financial burden of the energy sector remains substantial, consuming substantial fiscal resources. He questioned whether Ghana can continue financing the sector using state resources while meeting its development needs in other areas. Prof. Bokpin stressed that reducing losses in the electricity value chain requires significant investment in infrastructure and operational efficiency.

He emphasized that without substantial investment, significant reductions in generation, transmission, and distribution losses are unlikely. He urged policymakers to determine where this investment should come from, warning that if it must be entirely from the public purse, it could squeeze resources from other sectors. He encouraged clear communication about the proposed private sector involvement, cautioning against framing the reform as merely "letting go" of ECG.

Prof. Bokpin suggested a possible model where ECG remains a holding company, while private companies manage specific distribution zones, allowing the private sector to contribute expertise.