IES commends US$1.47bn energy debt clearance, outlines reforms to sustain power security

The Institute for Energy Security (IES) has commended the Government of Ghana for settling US$1.47 billion in energy sector arrears for the 2025 fiscal year, describing the move as a “critical lifeline” that has prevented a potential collapse of the national electricity grid.

In a statement dated Monday, 12 January 2026, and signed by Smith Prosper Boahene, Senior Research and Policy Analyst at IES, the institute noted that the payment addressed systemic risks, including the complete depletion of the World Bank Partial Risk Guarantee (PRG) and mounting legacy debts that had threatened operational continuity in the sector.

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IES highlighted three key areas where the debt clearance has strengthened Ghana’s energy sector:

• Restoration of the World Bank PRG: Replenishing the US$500 million guarantee ensures the Sankofa Gas Project can operate with reduced risk, reassuring international partners such as ENI and Vitol that gas production will continue without fear of payment defaults.

• Operational Reliability of IPPs: Payments totalling US$392.8 million to nine Independent Power Producers (IPPs), including Sunon Asogli and Karpowership, provide critical liquidity for maintenance and fuel procurement, reducing forced outages caused by financial shortfalls.

• Fiscal Credibility and Investor Confidence: Settling US$480 million in outstanding gas invoices signals to upstream partners, including Tullow and Jubilee, that Ghana is once again a dependable destination for energy investment.

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While applauding the decisive action, IES cautioned that one-off payments do not resolve the sector’s structural challenges. Technical and commercial losses at the ECG level and exchange rate volatility remain key vulnerabilities that could undermine gains if not addressed.

To ensure long-term stability, IES recommends:

• Full automation of the Cash Waterfall Mechanism to guarantee equitable and interference-free distribution of revenues.

• Accelerated rollout of smart meters to reduce commercial losses.

• Prioritisation of domestic gas over imported LNG to lower the weighted average cost of gas.

• Full transparency in IPP renegotiations to ensure value for money for taxpayers.

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IES concluded that the 2025 debt settlement represents a turning point for Ghana’s energy sector, but maintaining zero arrears and implementing structural reforms will determine the sustainability of the energy reset.