Mining and Energy Reforms: Strategic Priorities for Ghana Under President Mahama's Government

As President John Mahama begins his second term as Ghana’s leader under the Fourth Republic, the context of his leadership is markedly different from his first tenure between 2013 and 2017. During that period, discussions around the energy transition and renewable energy were still emerging. Today, the urgency of transitioning to cleaner energy sources has become a global priority, with profound implications for resource-rich countries like Ghana. President Mahama returns to office at a critical time for the extractive sector, which is rapidly evolving.

The past few years have been turbulent for Ghana’s upstream petroleum activities. The Minister of Energy terminated four petroleum contracts in 2021 for failing to meet minimum work obligations. Additionally, several oil blocks have been relinquished since 2019 and Ghana’s oil production has declined since 2020. In contrast, the mining sector has shown promising growth. Gold production reached 4 million ounces in 2023, an impressive 8.3 percent increase from the previous year. Bauxite and diamond production have also surged, increasing by 24.1 percent and 146.5 percent respectively, between 2022 and 2023, reflecting the sector's potential to contribute meaningfully to Ghana’s economy.

Addressing the mining sector’s changing dynamics will require strategic planning and active engagement from all stakeholders. In his new term, President Mahama must implement the following recommendations to revitalize the extractive sector for the benefit of all Ghanaians. 

Prioritize transition minerals governance

The global energy transition is creating a burgeoning demand for transition minerals. Ghana is richly endowed with transition minerals such as lithium, bauxite and graphite. However, outdated legislative and regulatory frameworks are hindering the country’s ability to capitalize on this opportunity.

The Minerals Commission must expedite the ongoing review of the 2014 Mining Policy and the Minerals and Mining Act. These revisions will pave the way for the resubmission of the lithium and bauxite contracts—previously under consideration in the recently dissolved Parliament—for parliamentary ratification. The revisions are also critical to establishing a more progressive fiscal regime that emphasizes community consultations and adherence to rigorous environmental and social standards for the transition minerals. 

Consolidate energy transition targets and leverage domestic financing

Ghana’s Energy Transition Framework, launched at COP27 and subsequently an Energy Transition Investment Plan during the UN General Assembly, aims to meet its net zero commitments by 2060 instead of the initial 2070 target. Realizing this vision requires approximately USD550 billion in investment, primarily from the capital market. Given Ghana’s high debt situation, the government must adopt a strategic approach to position the country as an attractive investment destination for foreign investment.

President Mahama must repurpose extractive revenues from petroleum through the annual budget prioritization, and mineral revenues through the Mineral Income Investment Fund, to stimulate domestic investment in the transition. These efforts should include downstream transition minerals beneficiation with adequate accountability provisions while consolidating the Transition Framework and the Investment Plan to create a cohesive and effective policy direction.

Enhance good governance and transparency

Corruption continues to undermine the realization of benefits from the extractive sector through opaque contracting, ineffective cost monitoring and tax evasion, and revenue leakages. Tackling corruption in the extractives sector requires decisive action. The government must strengthen anti-corruption institutions, appoint non-politically exposed persons to sensitive State-Owned Enterprises in the extractive sector, and enforce accountability measures. Revisiting competitive licensing and procurement in the petroleum sector is essential. Additionally, taking steps to introduce competition and transparent contracting practices in the mining sector will foster greater public trust and maximize the sector's potential.

Reevaluate gas ambitions with a focus on long-term sustainability

Ghana’s reliance on natural gas as the main fuel for power has grown substantially since 2020. The government expects to spend USD1.22 billion on natural gas in 2025, a sharp rise from USD455.8 million in 2019. The Energy Transition Framework also identifies natural gas as a transition fuel. However, several challenges have limited the country's ability to maximize value from the sector, including huge energy sector indebtedness, inadequate gas processing capacity and high financing costs, particularly for infrastructure.

Barely 48 hours after the President took office, a gas supply crisis looms. Imminent maintenance on the West Africa Gas Pipeline and Jubilee facilities will create supply deficits of up to 50 million standard cubic feet per day by March 2025. Planned shutdowns of the ENI gas facilities in September and November 2025 will further deepen the crisis, with gas shortages potentially reaching 102 MMscfd.

Public discourse has centered on addressing the short-term power crisis, often overlooking the sector’s long-term sustainability. There is a need for comprehensive reforms to address systemic inefficiencies to ensure sustainability.  The President Mahama-led government should review the gas masterplan to align gas ambitions with realistic goals and improve transparency of gas contracts. They must consider the risks of locking Ghana into a gas-for-electricity system with associated challenges, especially as renewable energy costs are decreasing. The government must guard against unbridled LNG contracts, which could worsen cashflow issues and increase electricity prices.

Improve institutional coordination in the energy sector

There is an urgent need for institutional strengthening and realignment within the petroleum and power sector to improve efficiency and coordination, reduce bureaucracy and conflict, and preserve the public purse. The objectives of these reforms should be clearly defined in consultation with various stakeholders, including worker unions, civil society and citizens. 

As the new government takes charge, the extractive sector must be central to Ghana’s development strategy. With decisive leadership and strategic foresight, Ghana can maximize its resource wealth, ensuring it catalyzes economic prosperity and resilience for generations to come.