The Mahama administration has disbursed a total of US$1.470 billion in 2025 to settle long-standing debts in Ghana’s energy sector, a move government officials say has been pivotal in restoring macroeconomic stability, securing electricity supply, and rebuilding the country’s international credit standing.
When President John Dramani Mahama took office in January 2025, the energy sector was widely regarded as one of the gravest risks to Ghana’s public finances.
Years of non-payment for gas supplied to power producers had resulted in significant arrears across the energy value chain, eroding private sector confidence and placing sustained pressure on the national budget.
A major pressure point was the World Bank Partial Risk Guarantee (PRG) linked to the Sankofa Gas Project at the Offshore Cape Three Points (OCTP) field.
The US$500 million guarantee, established in 2015 and instrumental in mobilising nearly US$8 billion in private investment from ENI and Vitol, had been fully depleted following repeated payment defaults under the previous administration.
The exhaustion of the PRG was widely viewed by analysts as a serious governance and debt management lapse, undermining Ghana’s credibility with development partners and international lenders.
The situation heightened perceptions of sovereign risk and contributed to the country’s declining credit profile.
In response, government announced that as of December 31, 2025, it had fully repaid US$597.15 million, including interest, drawn on the World Bank guarantee.
The repayment has restored the PRG in full, reinforcing Ghana’s standing as a reliable counterparty for large-scale infrastructure investments.
Additionally, the government settled about US$480 million in outstanding gas invoices owed to ENI and Vitol between January and December 2025.
This has brought Ghana completely up to date on its financial obligations to the Sankofa partners, eliminating a major source of uncertainty within the power sector.
Beyond gas-related liabilities, the administration also addressed legacy debts owed to Independent Power Producers (IPPs), which for years had burdened the energy sector and the wider economy.
In 2025, government paid a total of US$392.81 million to IPPs, including US$120 million to Karpowership Ghana, US$59.44 million to Cenpower Generation, US$54 million to Sunon Asogli, US$42 million to Early Power, US$37.99 million to Twin City Energy (Amandi), US$30 million each to AKSA Energy and Cenit Energy, US$10.56 million to BXC Company, and US$8.82 million to Meinergy Technology.
These payments form part of a broader restructuring of the power sector, which has seen the renegotiation of all IPP agreements to improve value for money and reduce future contingent liabilities on the state.
The government has also engaged upstream producers, including Tullow Oil and Jubilee Field partners, agreeing on a comprehensive roadmap to ensure full and timely payment for gas off-take.
These engagements have already supported increased gas production, aligned with a national strategy to expand domestic gas supply, drive industrial growth, and reduce reliance on costly liquid fuels.
Economists note that energy sector arrears have historically spilled over into the banking sector, weakened state-owned enterprises, and complicated fiscal consolidation, all of which undermined Ghana’s creditworthiness.
By committing US$1.470 billion within a single fiscal year to clear these obligations, the government says it has removed one of the most persistent structural risks to the economy, stabilised the energy sector, and taken a decisive step toward restoring investor confidence and long-term economic sustainability.
