The International Monetary Fund (IMF) has endorsed Ghana’s decision to open the operations of the Electricity Company of Ghana (ECG) to private sector participation, describing it as a key move to improve efficiency and address the country’s deepening energy sector challenges.
In its July 2025 country report on the fourth review of Ghana’s US$3 billion Extended Credit Facility (ECF) programme, the IMF identified the energy sector as one of the main sources of fiscal risk. It warned that in the absence of strong policy reforms, the sector’s annual shortfall could hit US$2.2 billion by 2025.
The Fund noted that ECG’s large commercial and technical losses, combined with slow electricity tariff adjustments and rising power generation costs, especially from the use of expensive liquid fuels were threatening the sector’s sustainability.
Staff welcomes the cabinet decision to open the electricity company’s operations to the private sector, the IMF said.
It added that private sector participation would help attract the investment and technical expertise needed to strengthen ECG’s operations and resolve legacy debts.
ECG is responsible for distributing power across six regions in southern Ghana: Greater Accra, Eastern, Volta, Ashanti, Western, and Central. Despite some improvements, including a 14.75 percent increase in electricity tariffs in April 2025 and better compliance with the Cash Waterfall Mechanism (CWM), significant challenges remain.
The IMF highlighted gaps between ECG’s reported collections and actual cash distributed under the CWM, noting that some Independent Power Producers (IPPs) received less than expected due to fuel payment delays and the addition of a new IPP that diluted payments.
To reduce the shortfall and improve financial stability in the short term, the IMF recommended full and consistent implementation of the Cash Waterfall Mechanism, regular payments to IPPs and fuel suppliers, clearance of legacy arrears, and improvements in transparency and accountability.
It also urged the government to accelerate implementation of the Energy Sector Recovery Programme, including a multi-year electricity tariff review by the end of September 2025, to reflect the actual cost of energy production.
In an interview, Nana Amoasi VII, Executive Director of the Institute for Energy Security, said privatisation, if well executed, could bring in the investment and efficiency needed to upgrade ECG’s infrastructure and improve service delivery.
He referenced the failed 2019 Power Distribution Services (PDS) deal, which collapsed due to unmet conditions, causing Ghana to lose nearly US$190 million under the second tranche of the Millennium Challenge Corporation (MCC) power compact.
Ms Alice Albright, CEO of MCC, noted in May 2024 that while the Corporation has no immediate plans for new engagement, it remains open to future collaboration to support Ghana’s long-term energy sector recovery.
The IMF’s support signals growing international confidence in Ghana’s decision to liberalise ECG, with stakeholders now urging the government to ensure transparency, strong regulation, and clear performance benchmarks in any future private sector arrangement.
