Ghana Targets Energy Sector Debt Reduction Amid Structural Reforms

Ghana is undertaking significant measures to reduce its $2.5 billion debt owed to independent power producers and gas suppliers by the end of 2025, as announced by President John Dramani Mahama. This initiative is part of a broader strategy to stabilize the country’s energy sector and ensure consistent electricity supply.

The debt, which has been a persistent issue, poses a substantial threat to Ghana’s economy and energy security. President Mahama emphasized the urgency of addressing this financial burden to prevent further economic strain. He highlighted inefficiencies within the Electricity Company of Ghana , noting that the utility experiences approximately 40% in commercial and technical losses, undermining its financial viability.

To enhance revenue collection and operational efficiency, the government plans to involve the private sector in electricity billing and metering processes. A pilot partnership between ECG and Enclave Power Limited has demonstrated success, achieving 99% revenue collection and near-uninterrupted power supply. This model is being considered for broader implementation to improve the sector’s financial health.

The administration is also focusing on structural reforms, including the establishment of a single revenue collection account and the enforcement of the Cash Waterfall Mechanism to prioritize debt payments. These measures aim to eliminate financial leakages and ensure that funds are appropriately allocated to settle outstanding debts.

In addition to financial restructuring, the government is advocating for increased utilization of domestic gas for power generation to reduce reliance on expensive crude oil imports. This shift is expected to result in significant cost savings and enhance energy sustainability.

President Mahama has also called for maximizing oil and gas extraction before the global transition to renewable energy intensifies. He expressed openness to investors interested in drilling and production, emphasizing the importance of leveraging existing resources during this transitional period.