A joint assessment by the United Nations Development Programme (UNDP) and auditing firm KPMG has endorsed the government’s strategic transition from light crude oil to domestically produced natural gas for power generation, describing it as a major opportunity to reduce costs and strengthen energy security.
The analysis, however, cautioned that the long-term success of the transition would depend heavily on Ghana’s ability to implement transparent tariff-setting frameworks and adopt cost-reflective electricity tariffs across the sector.
According to the report, the shift toward natural gas supported by rising production from the Offshore Cape Three Points (OCTP), Jubilee and TEN fields could significantly lower the cost of electricity generation.
The findings align with the government’s 2026 budget announcement, which outlines plans to expand gas utilisation for power production.
The Finance Minister also disclosed new infrastructure upgrades and fresh agreements with energy partners that will increase gas supply. These developments will support the construction of a new 1,200-megawatt state-owned thermal power plant beginning in 2026.
While the switch from crude oil to natural gas is projected to reduce generation costs by about 75 percent, the UNDP-KPMG report stressed that savings must be carefully managed across the full electricity value chain to ensure sustainability.
It emphasised that the financial health of the sector hinges on transparent tariff-setting and pricing that accurately reflects actual production, transmission, distribution and supply costs.
The report underscored the crucial role of the Public Utilities Regulatory Commission (PURC), urging the regulator to adopt pricing models that protect the operational viability of key institutions such as the Electricity Company of Ghana (ECG), the Ghana Grid Company (GRIDCo), and independent power producers. Cost-reflective tariffs, it said, would also help prevent excessive fiscal burdens on the national budget.
The government’s ongoing energy diversification efforts including feasibility studies for mini-hydroelectric dams on the Red Volta and several southern rivers were noted as complementary steps toward achieving a resilient and sustainable energy mix.
But the report warned that without a financially sound tariff structure, these gains could be undermined.
It further cautioned that the absence of cost-reflective tariffs could expose the power sector to recurring cycles of debt, liquidity constraints and underinvestment problems that have previously destabilised the industry.
Strengthening transparency in tariff-setting, the report added, would be essential for building public trust and ensuring consumers understand and accept necessary price adjustments.
