There is a renewed strength for Ghana’s long-troubled energy sector as it has received its strongest lifeline in years after the government paid a total of US$1.470 billion in 2025 to clear legacy debts.
This means that the debt-saddled energy sector, which posed a major threat to the country’s financial stability, can now heave a sigh of relief, restoring investor confidence and stabilising electricity generation.
The sweeping intervention, announced by the Ministry of Finance on early Monday morning, marks one of the most decisive fiscal actions taken under the Mahama Administration within its first year in office.
The Troubled Energy Sector Inheritance
The statement released by the Finance Ministry recounts that when President John Dramani Mahama assumed office in January 2025, the energy sector was teetering on the brink.
Years of unpaid gas and power bills had exhausted a crucial World Bank Partial Risk Guarantee (PRG) meant to protect investors in the Sankofa Gas Project, a cornerstone of Ghana’s power supply.
This depletion of the US$500 million guarantee had raised red flags internationally, threatening nearly US$8 billion in private investment tied to the OCTP Sankofa project operated by ENI and Vitol.
But alas, by December 31, 2025, the government had fully repaid US$597.15 million drawn on the World Bank guarantee, including interest, restoring the facility in full and reopening the door to renewed investor confidence.
Settling Gas and Power Bills
Beyond the guarantee, the government also cleared all outstanding gas invoices owed to ENI and Vitol, paying about US$480 million to ensure Ghana is fully up to date for gas used in power generation.
This move alone has stabilised gas supply for electricity production and reduced the risk of outages linked to payment disputes.
At the same time, engagements with Tullow Oil and Jubilee Field partners have produced a clear roadmap for settling gas payments, supporting reliable power generation and industrial growth.
Paying Down IPP Legacy Debts
A major portion of the US$1.470 billion went into clearing long-standing debts owed to Independent Power Producers (IPPs), many of whom had struggled with delayed payments for years.
For instance, according to the statement, in 2025 alone, the government paid about US$393 million to IPPs, including:
Karpowership Ghana – US$120 million
Cenpower – US$59.4 million
Sunon Asogli – US$54 million
Early Power – US$42 million
Twin City Energy (Amandi) – US$38 million
AKSA Energy – US$30 million
Cenit Energy – US$30 million
BXC – US$10.56 million
Meinergy – US$8.82 million
These payments have eased cash flow pressures on power producers and helped restore trust between the government and private operators.
The Impact of the Strong Cedi in these Payments
Importantly, the recent strengthening of the cedi is expected to help reduce the real dollar cost of settling these obligations.
With the local currency firmer, the government spent less in dollar terms than it would have under a weaker exchange rate, stretching scarce resources further.
The Way Forward
Beyond clearing arrears, the government has renegotiated IPP contracts to secure better value for money and has strictly enforced the Cash Waterfall Mechanism to prevent fresh debt build-up. For most of 2025, IPP invoices have been paid largely on time.
Officials insist this is not a one-off bailout but a full reset of the energy sector’s finances.
“The Government of Ghana assures the general public, industry stakeholders, and international partners that the era of uncontrolled energy sector debt accumulation is over,” the statement indicated.
What It Means for Ghanaians
For households and businesses, this debt relief for the sector means more reliable electricity, reduced risk of power disruptions, and a sector finally positioned to support industrial growth.
After periods of darkness caused not by lack of power plants but unpaid bills, Ghana’s energy sector appears to have turned a decisive corner.
