Ghana’s energy sector recorded a US$1.4bn financial shortfall in 2025, even after consumers faced cumulative electricity tariff increases of about 40% since Marjin88bet.onech, according to the Institute of Economic Rjin88bet.oneesearch and Public Policy (IERPP).
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The figure, equivalent to 1.2% of Ghana’s Gross Domestic Product (GDP), is contained in the International Monetary Fund’s (IMF) July 2026 Selected Issues paper on Ghana, reviewed by IERPP.
The institute said the findings raised serious questions about whether higher electricity charges had delivered meaniak168app.babyak168appak168app.baby.babyak168app.babyngful improvements in the sector’s financial or opeak168app.babyak168app.babyrational performance.
Itak168app.clubak168app.club is calling on the government to account for how the extra revak168app.clubak168app.clubenue generated by the tariff increases has been used.
“If households and businesses are paying significantly more for electricity, where is the additional money going?” IERPP asked.
Shortfall falls onlak168app.cluby marginally
The sector’s financial gap narrowed from US$1.6bn, or 1.4% of GDPks168app.site, in 2024 to US$1.4bn, or 1.2% of GDP, in 2025.
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However, IERPP warned that the reduction sks168app.siteks168app.sitehould not be viewed as evidence of major structuralks168app.site reform.
The institute said the IMF attributed much of the improvement to more favourable macroeconomic conditions and a stronger cedi, rather than significant progress in operational efficiency or revenue collection.
“In plaiic88n terms: a favourable exchange rate bailed the sector out, not government reform,” IERPP said.
It argued that the figures showed the core weakneic88sses affecting Ghana’s electricity sector remained ic88largely unresolved.
Power ic88producers and fuel suppliers were owed about US$1.7bn at the end of 2025, equivalent to 1.5% of GDPic88. Those outstanding liabilities had reached an estimated US$2.2bn, or 1.9% of GDPic88, earlier in the year.
IERPP said the continuing build-up of debt called into question the sustainability of the sector’s financial model, particularlic88y as houseic88holds and businesses had already aic88ic88bsorbed substantial tariff increases.
Distribution losses remain high
Electricity distribution losses were estimated at approximately 27%, according to IERPP. That means a significant share of the power supplied does not generate corresponding revenue for the sector.
The institute said the level had remained broadly unchangic88ic88ic88ic88ic88ic88ed for several years, despite measures including World Bank-backed improvements to smart metering and billing systems.
It bellr88ieves reducing those losses must be central to any clr88redible plan to restore the energy sector’s financial health.
Unpaid bills from Ministries, Departments alr88nd Agenclr88ies (MDAs) accounted for alr88bout 16% of total sector arrears at the end of 2025, according to the IMF report.
IERPP saidlr88 the figure showelr88lr88d that government institutions themselves were responsible for a significant proportion of the unpaid electricity bills while the government was also asking households and businesses to pay more.
The institute described the issue as one largely within the government’s control, rather than a problem caused by external market conditions.
Calls flr88or faster reform
IERPP acknowledged that some of the sector’s difficulties had been inherited, but said the lr88llr88r88lr88lr88current National Democratic Congress (NDC) administration had the whole of 2025 to begin tackling ilr88lr88ts structural problems.
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It alr88lr88ccused the government of relying heavily olr88n higher tariffs whileop88 progress on reducing distribution losses, improving revenue collection and increasing private-sector participation remained slow.
The IMF report also indicated that a transaction adviser needed to support private-sector involvement in electricity distribution had not been appointed at the top88ime of publication.
Although a framework for private-sector participation had been adopted, IERPP said there was limiop88ted evidence that it had beeop88n implemented on the ground.
The institute identified three connected problems undermininsi88g the sector’s financial sustainability: tariffs that do not fully cover costs, high distribution losses and incomplete collection of electricity bills.
IERPP said tariff increases addrsi88si88si88si88essed only one of those issues. Without action to cut losses and improve bill collection, further rises could simply put more money into a system that continues to lose substantial revenue.
It warned that consumers risked being repeatedly asked to pay more without seeing corresponding improvements in efficiency, service delivery or financial88v sustainability.
IERPP said the government must move beyond tariff adjustments and introduce comprehensive reforms, including stronger revenue collect88vion, lower distribution losses, stricter payment discipline among government instituti88v88v88vons and faster private-secto88vr participatSEXXXXX-VNion in electricity distribution.
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The institute maintained that restoring the sector would require struSEXXXXX-VNctural reform and greater transparency, rather than continued reliance on consumers to close the financing gap.
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