Ghana’s energy sector is bracing for a significant financial burden in 2025, as the country is projected to spend over US$1 billion on liquid fuels to keep its thermal power plants running. This revelation came from Minister for Energy and Green Transition, John Jinapor, who described the situation as “unsustainable.”
Speaking at the inauguration of the Technical and Steering Committees for the construction of Ghana’s second gas processing plant (GPP2) in Accra, Jinapor attributed the surging costs to the country’s growing electricity demand, estimated to rise by 300 megawatts annually, and a chronic shortfall in natural gas supply.
“Currently, liquid fuel is not even part of the tariff structure, and yet we’re forced to depend on it due to our gas deficit,” he stated, highlighting the dire implications of relying on costly alternatives such as diesel, light crude oil, and heavy fuel oil.
The minister revealed that Ghana is grappling with a daily gas shortfall of approximately 100 million standard cubic feet (MMscf), pushing the country toward increasingly expensive stopgap measures. This gap, he said, has compelled the state to channel scarce foreign exchange into liquid fuel imports, an unsustainable practice given global price volatility and domestic fiscal pressures.
As a strategic pivot, the government has commenced construction of GPP2, a critical infrastructure project aimed at enhancing domestic gas processing capacity. Jinapor emphasized the project’s economic merit, noting: “With the new plant, we expect to save up to US$500 million annually. This means that in just two years, the plant would pay for itself.”
Beyond cost savings, the facility is expected to significantly boost local gas availability, curb environmentally harmful flaring practices, and support Ghana’s transition to cleaner energy sources. It is also projected to stimulate job creation and expand access to Liquefied Natural Gas (LNG) and Liquefied Petroleum Gas (LPG).
The announcement comes at a time when Independent Power Producers (IPPs) continue to lobby the government over delayed payments for fuel supplies. The Minister believes the GPP2 project could ease these pressures by reducing reliance on imported liquid fuels and improving cash flow across the power sector’s value chain.
Chairing the Steering Committee, Minister for Finance Dr. Cassiel Ato Forson echoed similar concerns about the country’s energy vulnerabilities. He expressed frustration over the stalled development of critical gas infrastructure in previous years.
“Without the Atuabo Gas Processing Plant, we would have faced even greater challenges. I’m surprised the previous administration, after years of talking, did not commence this second facility,” he said.
Dr. Forson reiterated that savings from gas substitution over just two years would be sufficient to offset the cost of building GPP2, urging the Technical Committee to expedite contractor selection and project execution.
Despite the positive outlook from government officials, questions remain about the project’s financial transparency. The Africa Centre for Energy Policy (ACEP), a leading energy think tank, has flagged the absence of GPP2 and its financing structure in the 2025 Budget.
In its ‘2025 Budget Insights’ report, ACEP criticized the lack of disclosure regarding how the plant will be funded, especially in light of Cabinet’s reported approval of the project. The group also raised concerns over project cost benchmarks, referencing an earlier GPP2 proposal estimated at US$800 million more than double the global average for similar facilities.
“The Ghana Upstream Petroleum Chamber estimates that Ghana lost about US$290 million from gas flaring in 2023. Projects like GPP2 should help commercialize flared gas but we must ensure value-for-money by avoiding inflated project costs,” ACEP cautioned.
The think tank called for increased transparency, competitive procurement processes, and stringent oversight to ensure the public receives full value from investments in national energy infrastructure.
