News Guide Africa

Tag: Independent Power Producers (IPPs)

  • Taxpayers bear the burden as state support for ECG reaches GH₵38bn

    Taxpayers bear the burden as state support for ECG reaches GH₵38bn

    By Adnan Adams Mohammed

     

    State support for the Electricity Company of Ghana (ECG) has reached nearly GH₵38 billion over a two-year period, shifting a massive financial burden onto Ghanaian taxpayers to keep the state power distributor afloat amid persistent operational deficits.

    Newly published 2025 audited financial statements show that while ECG reported a reduced post-tax loss of GH₵2.52 billion down from GH₵8.26 billion in 2024 the apparent recovery was heavily sustained by direct government intervention and favorable foreign exchange movements rather than operational improvements.

    In 2024, the government provided ECG with a grant of GH₵17.03 billion, booked directly as income. In 2025, the state stepped in again, paying GH₵20.86 billion directly to independent power producers (IPPs) and fuel suppliers on ECG’s behalf. Unlike the previous year’s grant, the 2025 payment has been recorded as a loan that ECG is required to repay to the central government.

    Commenting on the fiscal toll of these interventions, financial analyst Alfred Appiah highlighted the opportunity cost of continuously funding the utility’s shortfalls.

    “It’s nearly 38 billion cedis of state support across two years money from the Consolidated Fundrrts that could have gone to classrooms, roads, clinics, and sanitation systems,” Appiah stated. “Every cedi that covers ECG’s shortfall is a cedi not spent somewhere else.”

     

    The underlying financial health of the power distributor remains fragile. ECG recorded an operating loss of GH₵14.35 billion in 2025, with gross losses standing at GH₵12.66 billion as cost of sales (GH₵34.77 billion) significantly outpaced revenue (GH₵22.11 billion). The reported loss was only contained due to a GH₵12.16 billion foreign exchange gain resulting from cedi performance, given that ECG purchases power denominated in U.S. dollars but collects revenue in local currency.

    Efficiency metrics show little sign of structural recovery. Distribution losses rose slightly from 26.88% in 2024 to 27.05% in 2025, reflecting unaddressed technical and commercial leaks in the distribution grid.

    “This is why efficiency at ECG is not a technical concern; it is a fiscal one,” Appiah emphasized. “Strip out forex movements and government support and nothing has changed. ECG loses roughly 15 billion cedis a year from its core operations. Until the losses come down and collections improve, the bailouts continue, and taxpayers shoulder the burden.”

     

    With total comprehensive losses reaching GH₵4.90 billion for 2025 and total equity standing at GH₵438 million, pressure is mounting on state authorities to enforce structural reforms at ECG to prevent further drain on public funds.

     

  • The Power Conundrum: Leadership and investment gaps fuelling Ghana’s power crisis

    The Power Conundrum: Leadership and investment gaps fuelling Ghana’s power crisis

    By Adnan Adams Mohammed

    Ghana’s energy landscape is currently caught in a volatile tug-of-war between aging infrastructure and a surge in demand.

    As recent technical failures, including a major fire at the Akosombo switchyard, have dominated headlines, energy experts warn that the real crisis lies deeper: in a “trifecta” of poor planning, communication breakdowns, and a massive investment deficit.

    A crisis of leadership and logic

    The recurring nature of the country’s power outages, popularly known as dumsor, has drawn sharp criticism from policy analysts.

    Benjamin Nsiah, an energy sector commentator, argues that the current instability is not merely technical but a failure of governance.

    “The energy sector is currently facing significant planning, communication, and leadership challenges,” Nsiah stated. He pointed out that the lack of a transparent, published load-shedding timetable has left businesses and households in the dark, both literally and figuratively. “Without clear communication and a proactive leadership approach, the sector will continue to react to crises rather than prevent them.”

    The billion-dollar investment gap

    While leadership is under fire, others point to the cold, hard reality of economics. Michael Aidoo, a prominent energy consultant, highlighted that the grid’s frailty is a direct result of years of underfunding.

    “The recurring power issues we are seeing today are tied inextricably to massive investment gaps,” Aidoo explained. He noted that as the population grows and industrialization efforts expand, the existing transmission lines and transformers are being pushed past their breaking points. “We are operating a 21st-century economy on a 20th-century backbone. Until we bridge the financing gap for infrastructure upgrades, these outages will persist.”

    Akosombo fire: A wake-up call

    The vulnerability of the system was laid bare recently when a fire broke out at the Akosombo switchyard, a critical node in the nation’s hydroelectric heart. The incident caused widespread blackouts, forcing the government into a defensive posture.

    In response, the Ministry of Energy announced an emergency “system upgrade” to modernize the switchyard and surrounding infrastructure. “The government is moving swiftly to upgrade the power system following the Akosombo switchyard fire,” a ministry spokesperson confirmed. Officials stated that the upgrade is intended to build redundancy into the grid so that a single failure at one plant does not trigger a national collapse.

    The frontlines: Afram Plains and regional stability

    Despite the systemic gloom, there have been pockets of operational success. The Electricity Company of Ghana (ECG) recently completed a high-stakes repair mission to restore power to the Afram Plains. The area had been plunged into darkness after a submarine cable—the lifeblood of the district’s power supply—was severely damaged.

    “Our technical teams worked around the clock in challenging marine conditions to restore the cable,” an ECG representative noted. The restoration was met with relief by local residents who had been without power for days, disrupting local trade and healthcare services.

    Karpowership: A stabilizing force?

    As the country seeks long-term solutions, independent power producers (IPPs) continue to play a pivotal role. In the Western Region, local leaders have expressed vocal support for Karpowership Ghana. During a recent facility visit, Western Regional Chiefs lauded the company for its consistent contribution to the national grid.

    “We appreciate the stability that Karpowership brings to our region and the country at large,” noted one of the traditional leaders. The chiefs emphasized that while the nation works on its permanent infrastructure, such strategic partnerships are essential to keeping the lights on for local industries.

    The path forward

    The consensus among stakeholders is that a “quick fix” is no longer an option. Between the technical restoration of submarine cables and the strategic praise for floating power plants, Ghana sits at a crossroads. Industry observers maintain that unless the government addresses the “leadership challenges” cited by Nsiah and the “investment gaps” flagged by Aidoo, the cycle of outages will continue to haunt the nation’s economic ambitions.

     

     

  • Fuel Levies: ACEP backs One-Cedi power tax as protesters demand immediate scrap

    Fuel Levies: ACEP backs One-Cedi power tax as protesters demand immediate scrap

    A sharp divide has emerged over the future of Ghana’s energy sector financing, as energy experts and grassroots activists clash over the necessity of fuel-related levies amidst a biting cost-of-living crisis.

    At the center of the storm is a proposed one-cedi levy on petroleum products, which the Africa Centre for Energy Policy (ACEP) describes as a “bitter pill” necessary to prevent the total collapse of the national power grid.

    “The Sector is Gasping” – ACEP

    Speaking on the dire state of the energy industry, the Executive Director of ACEP, Ben Boakye, argued that the one-cedi levy is essential to address the systemic debt choking the sector. According to Boakye, the revenue generated from this levy is the only immediate lifeline available to keep the power sector afloat.

    “The reality is that the power sector is gasping for breath under the weight of legacy debts and operational inefficiencies,” Boakye stated. He explained that without a dedicated funding stream to settle arrears owed to Independent Power Producers (IPPs) and fuel suppliers, the country risks a return to protracted load shedding (Dumsor).

    Boakye emphasized that while the timing is difficult for consumers, the alternative

    a complete breakdown of the power system would be far more expensive for the Ghanaian economy.

    The People’s Forum Hits Back

    However, this technical justification has found little sympathy with the “People’s Forum,” a pressure group that has officially petitioned the government to scrap all fuel-related levies.

    The group, representing a cross-section of frustrated drivers, traders, and ordinary citizens, argues that the cumulative burden of taxes on petroleum products has become “extortionate.” In their petition, they highlighted that fuel prices serve as a catalyst for inflation, driving up the cost of food and transport to unbearable levels.

    “We cannot be the ones to always pay for the mismanagement of the energy sector,” a spokesperson for the People’s Forum noted during a press briefing. “The government must find other ways to plug the holes in the budget rather than squeezing the last cedi out of the pockets of struggling Ghanaians.”

    A Policy Dilemma

    The government now finds itself in a precarious position. On one side, technical experts like ACEP warn that the energy sector faces a $1.5 billion shortfall that could trigger a national blackout. On the other, the People’s Forum represents a growing public sentiment that the populace has reached a “breaking point” regarding taxation.

    The fuel-related levies currently include the Energy Sector Levy (ESLA), the Sanitation and Pollution Levy, and the Special Petroleum Tax, among others. The addition of a new one-cedi levy, or the maintenance of existing ones, remains a political lightning rod.

    As the Ministry of Finance reviews the petitions from the People’s Forum, the energy industry watches closely. For Ben Boakye and ACEP, the choice is between “a small levy or total darkness.” For the People’s Forum, it is a choice between “economic survival or state-induced poverty.”

    Parliament is expected to deliberate on the energy sector’s financial requirements in the coming weeks, a session that is likely to be met with further protests at the gates of the house.

     

     

  • Ghana energy debt reset solidifies World Bank trust and global credibility

    Ghana energy debt reset solidifies World Bank trust and global credibility

    By Adnan Adams Mohammed

    The Ghanaian government has injected US$1.47 billion into the energy sector to repair its international reputation, prioritizing the restoration of the World Bank Partial Risk Guarantee.

    This measure aims to stabilize the economy and signals a commitment to global capital markets.

    The Finance Minister, Dr. Cassiel Ato Forson, has emphasized that the energy sector is a major threat to Ghana’s financial stability, and restoring the PRG is crucial for reviving the US$8 billion Sankofa Gas Project.

    He described the energy sector as “one of the gravest threats to Ghana’s financial stability,” noting that the US$500 million (GH₵5.36 billion) guarantee had been completely exhausted by the start of 2025. Restoring this safety net is seen as a prerequisite for reviving the US$8 billion (GH₵85.76 billion) in private sector investment tied to the Sankofa Gas Project.

    Consequently, the World Bank’s Country Director, Robert Taliercio O’Brien, has praised Ghana’s efforts but has also stressed the need for long-term structural reforms.

    The debt clearance has sparked debate, with the opposition questioning the government’s narrative and emphasizing the need for transparency. The average Ghanaian hopes the investment will stabilize the power grid and reduce outages.

    The energy levy, introduced to address sector challenges, has contributed to improved power stability. However, stakeholders call for greater transparency in its utilization.

    This bold move could serve as a model for fiscal recovery and energy stability across Sub-Saharan Africa, proving that decisive debt management can restore international partnerships.

    A Renewed Framework for Ghana-World Bank Relations

    The restoration of the PRG marks a pivot in the diplomatic relationship between Accra and Washington.

    Mr O’Brien emphasised that while the debt clearance is a “major milestone,” the focus must now shift toward long-term structural health. The World Bank has signalled that its ongoing commitment to Ghana is contingent on “maintaining fiscal consolidation” and “addressing structural inefficiencies” in the state-owned energy entities.

    In a recent policy synthesis, O’Brien noted that the era of recurrent crises and fiscal indiscipline must give way to a “business-friendly environment to stimulate private investment.” This reset is not merely a financial transaction but a commitment to a transparent roadmap for the sector’s future.

    Balancing the Ledger of Legacy Debts

    A critical component of this fiscal strategy involved the repayment of US$597.15 million (GH₵6.40 billion) to the World Bank and US$480 million (GH₵5.15 billion) in gas invoices to ENI and Vitol. These payments effectively bring Ghana “fully up to date on its obligations to the Sankofa partners.”

    The Ministry of Finance stated that the previous depletion of these funds “represented a serious governance failure that undermined Ghana’s international credibility.” However, the sheer volume of this payout roughly GH₵15.76 billion in a single year raises inevitable questions about opportunity costs. While the energy sector finds oxygen, other vital areas like healthcare and education may face tighter budgets due to this concentrated capital flight toward debt servicing.

    De-risking the Domestic Financial System

    From a systemic view, the US$393 million (GH₵4.21 billion) paid to Independent Power Producers (IPPs) acts as a lifeline for the domestic banking sector.

    Dr Johnson P. Asiama, Governor of the Bank of Ghana, recently noted that energy sector arrears remain a “primary driver of financial sector instability” due to their impact on non-performing loans. By clearing these debts to companies like Cenpower and Sunon Asogli, the government is effectively de-risking the balance sheets of local banks.

    Energy economist Dr Maxwell Akoto warns, however, that the Cash Waterfall Mechanism the system used to distribute electricity revenues must remain “insulated from political interference” to prevent the debt cycle from restarting.

    Blueprint for Sub-Saharan Fiscal Recovery

    The World Bank’s validation of this restoration will be critical for Ghana’s future credit ratings and its ability to re-enter international bond markets. By settling these legacy debts, the Mahama administration has moved from a position of default to one of compliance, yet the sustainability of this move remains under the microscope.

    As Ghana enters 2026, the global lens is focused on whether this “continued discipline” can be maintained amidst the pressure of domestic growth and political cycles.

    If successful, this US$1.47 billion (GH₵15.75 billion) investment could serve as a model for fiscal recovery and energy stability across Sub-Saharan Africa. It proves that decisive debt management can restore even the most fractured international partnerships.

    However, the true measure of success will be whether this discipline can be maintained through the current year and beyond.

    The Effect of the GH₵1-per-litre Energy Levy

    The government has defended the utilisation of proceeds from the GH₵1-per-litre Energy Sector Shortfall and Debt Repayment Levy, saying the policy has contributed significantly to stabilising Ghana’s power supply.

    Minister of State in charge of Government Communications, Felix Kwakye Ofosu, said the levy has been effectively applied to address challenges in the energy sector and ensure consistent electricity delivery.

    He made the remarks while addressing the press last week, as part of the Government Accountability Series.

    “What is clear is that the energy levy has certainly been put to good use and has contributed significantly to achieving stability in the power sector,” Mr Kwakye Ofosu stated.

    According to him, the country’s electricity situation has improved markedly compared to earlier periods marked by frequent disruptions.

    “When we took over, there were challenges with electricity stability, and I think all of us can attest that for several months now, electricity has been stable. We have not experienced the outages that many had feared would occur,” he added.

    The Energy Sector Shortfall and Debt Repayment Levy was introduced as part of measures to clear legacy debts and support the financial sustainability of the power sector. However, it has faced calls for transparency from stakeholders.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

  • Energy sector shortfall persists …IMF warns of ballooning costs amid privatisation option

    Energy sector shortfall persists …IMF warns of ballooning costs amid privatisation option

    Ghana’s energy sector shortfall is projected to balloon to US$1.10 billion in 2026, despite marked improvements, the International Monetary Fund (IMF) has warned.

    During the review period, the shortfall was over US$500 million, as assumed by the government through legacy debt payments or fuel purchases.

    “The smaller budgeted shortfall is justified by the 2025 outturn, as well as the expected reduction in power generation costs from renegotiated PPAs and projected decreased reliance on costly liquid fuels,” the IMF said in its Staff Report on Ghana.

    The IMF projects an energy sector shortfall of US$1.103 billion in 2026, comprising a US$925 million power sector shortfall and US$178 million gas sector shortfall. Revenue to be collected is projected at US$2.607 billion, whilst generation costs are estimated at US$3.53 billion.

    “The government and IPPs have agreed to restructure their legacy debt,” the IMF noted. “In 2025’s Q3, the government agreed with nine IPPs on a comprehensive payment plan for legacy arrears accumulated up to end-June 2025, including substantial haircuts (15 to 30%), significant upfront payments (around $300 million in 2025), and biannual payments for the remainder between 2026 and 2029.”

    The IMF also revealed plans to privatise the Electricity Company of Ghana (ECG), stating that “by the end of 2025, a transaction advisor is expected to be hired to oversee the selection process for private sector concessionaires for electricity distribution.”

    ECG’s payments to independent power producers (IPPs) have increased significantly, reaching $308 million in the first half of 2025, compared with $325 million for 2024 in total. The IMF urged more action to restore ECG to financial sustainability and reduce fiscal risks in the sector.

     

    By Adnan Adams Mohammed

     

     

     

     

     

     

     

     

     

     

  • 2026 Budget: Gov’t prioritizes energy sector to boost industrial growth

    2026 Budget: Gov’t prioritizes energy sector to boost industrial growth

    The 2026 Budget as read by the Finance Minister places the energy sector at the center of the country’s economic transformation, with a renewed focus on financial stability, renewable energy expansion, and reliable power supply.

     

    Dr. Cassiel Ato Forson announced that the government’s Energy and Green Transition Programme aims to provide sustainable electricity for households, industry, and exports, making it a key driver of national growth.

     

    Key interventions highlighted include the continuation of the Energy Sector Recovery Programme (ESRP), the Cash Waterfall Mechanism, and targeted measures to clear legacy debts owed to Independent Power Producers (IPPs).

     

    These reforms are expected to restore investor confidence, stabilize the operations of the Electricity Company of Ghana (ECG), and improve efficiency across the power value chain.

     

    In line with Ghana’s climate commitments, the government plans to increase renewable energy generation to 15 percent by 2030, supported by projects such as the Bui Solar Expansion, Akonor Solar Park, and off-grid mini-grid systems across Northern Ghana. These initiatives are designed to complement industrial electrification and support the 24-Hour Economy initiative by ensuring continuous power availability.

     

    The Green Jobs and Skills Programme, under the Ministry of Energy and Employment, is training thousands of young Ghanaians in solar assembly, installation, and maintenance, building a skilled workforce for the emerging energy sector.

     

    Dr. Forson emphasized that stabilizing the energy sector, expanding renewables, and developing local expertise will boost industrial productivity, reduce operational costs, and provide a sustainable energy foundation for Ghana’s long-term economic growth.

  • Gov’t saves US$300m after renegotiating IPP debt

    Gov’t saves US$300m after renegotiating IPP debt

    The government is set to save about US$300 million following successful renegotiations with Independent Power Producers (IPPs), which have reduced the sector’s outstanding debt from US$1.5 billion to US$1.2 billion.

    The disclosure was made by Ben Boakye, Executive Director of the Africa Centre for Energy Policy (ACEP), who serves on the committee that led the restructuring talks.

    He explained that the process was carefully designed to ease the financial burden on the government while safeguarding investor confidence in the power sector.

    Speaking on the sidelines of the Future of Energy Conference hosted by ACEP, Mr. Boakye commended the cooperation of the IPPs.

    “The IPPs have been very magnanimous, even though we have a binding contract and agreements with them. They have been magnanimous enough to give us a haircut, which I am sure the minister will announce at some point.

    “We are just here to help to make the power sector sustainable. We are looking close to about US$300 million on the debt and also over a billion in future payments,” he said.

    The long-standing debt burden has in recent years strained relations between government and IPPs, with some producers shutting down operations due to non-payment.

    These disruptions occasionally affected power supply and raised concerns about the country’s energy security.

     

     

  • ESLA, IPPs receives GHC20bn budgetory alocation for 2025 Q1

    Finance Minister, Dr. Mohammed Amin Adam

    Adnan Adams Mohammed

    The 2025 Mini-Budget as presented to the outgoing eighth parliament has allocated GHC20 billion for interest payments, including obligations to Independent Power Producers (IPPs) and the Energy Sector Levy Account (ESLA).

    This was disclosed by the Chairman of the Finance Committee, Patrick Boamah, during the debate and approval of the delayed 2025 mini-budget.

    “The Committee noted that projections in respect of interest payments amounted to GHC20,691,523,500.00. The amount includes payments to the Energy Sector Levy Account (ESLA) and Independent Power Producers (IPPs),” Hon Boamah disclosed.

    However, the Finance Minister, Dr. Mohammed Amin Adam, has assured the Joint Committee on Budget and Finance that the delay would not adversely impact government operations.

    He emphasized that measures were in place to guarantee the smooth functioning of public services during the transitional period.

    This development follows Parliament’s approval of the 2025 Mini-Budget, amounting to GHC68.13 billion. The budget is intended to cover government operations for the first quarter of 2025, pending the presentation of a comprehensive budget by the incoming Mahama administration.

    The approved expenditure also projects total revenue and grants for the first quarter of 2025 at GHC42.54 billion, representing 3.5% of Ghana’s GDP.

    Parliament’s approval came after extensive deliberations and scrutiny at the Finance Committee level. The discussions highlighted key concerns, including debt management, revenue mobilization, and the government’s fiscal consolidation efforts.

    The 2025 Mini-Budget represents a crucial tool to stabilize the economy and sustain critical services during a politically transitional period.

     

  • IMF flags Ghana’s energy sector deficit, pushes for swift reforms

     

    International Monetary Fund

     

     

    Ghana’s energy sector remains under pressure as the International Monetary Fund (IMF) highlights persistent challenges and calls for urgent reforms under the Energy Sector Recovery Programme (ESRP) to restore fiscal stability.

     

    In its latest staff report, the IMF revealed that Ghana’s energy sector deficit for 2024 exceeded expectations, widening by 0.6 percentage points of GDP and further straining public finances.

     

     

    Persistent inefficiencies, particularly the Electricity Company of Ghana’s (ECG) failure to effectively implement the Cash Waterfall Mechanism, have worsened arrears owed to Independent Power Producers (IPPs) and fuel suppliers.

     

    Despite these challenges, the IMF expressed optimism about forthcoming reforms. A draft energy sector strategy aimed at cutting operational costs and boosting revenue collection is expected to be finalised by June 2025 and approved by Cabinet by September 2025.

     

     

    To address the sector’s vulnerabilities, the IMF proposed key medium-term measures, including:

     

    Debt Audits: Completion of legacy debt validation audits for 2023 and 2024 by March and August 2025, respectively.

     

    Tariff Reforms: Quarterly tariff adjustments under the Public Utilities Regulatory Commission’s (PURC) 2022-2025 Electricity and Water Major Tariff Review, backed by technical analyses to ensure financial sustainability.

     

    Operational Review: A thorough assessment of inefficiencies across the energy sector to be led by PURC.

     

    As part of immediate steps, a 3% average electricity tariff increase introduced in October 2024 is already in effect to address growing losses.

     

    The IMF report noted that as of December 2023, energy sector arrears, including legacy debts, stood at USD2.1 billion, equivalent to 2.8 per cent of GDP.

     

    The IMF cautioned that the energy sector remains a significant fiscal risk, warning that “timely implementation of these reforms is essential to mitigating vulnerabilities and achieving sector stabilisation.”