Ghana energy sector inefficiencies strain national finances

Ghana’s energy sector is creating significant fiscal pressure on the nation’s public finances, driven largely by structural issues within the Electricity Company of Ghana (ECG). An International Monetary Fund (IMF) technical assistance report identifies ECG as a central figure in a complex problem involving tariff under-recovery, expensive power contracts, and revenue collection challenges. The report notes that these issues extend across the entire value chain, including generation, transmission, and distribution, involving other state-owned enterprises such as GRIDCo, NEDCo, and the Volta River Authority (VRA).

Ben Boakye, Executive Director of the African Centre for Energy Policy (ACEP), warned that these inefficiencies are deepening social and economic inequalities. He estimated that ECG alone records annual losses exceeding GH¢20 billion, a burden ultimately absorbed by the national budget. Boakye further noted that the government has increasingly relied on domestic and Eurobond borrowing to settle debts to independent power producers (IPPs) and cover fuel costs, adding significant interest expenses to the total cost of managing the energy sector.