• 16 Jul, 2025
• Classic Ghana
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A Blueprint for Energy Reform: IPPG Report Outlines Policy Priorities for the NDC Government

Ghana’s energy sector has been described as the country’s most pressing economic threat, with an estimated annual financial shortfall of nearly $2 billion, according to the Finance Minister, Dr. Cassiel Ato Hayford. A new report by policy think tank, International Perspective for Policy & Governance(IPPG) warns that the window for meaningful energy sector reform is rapidly closing and that bold, coordinated action is urgently needed. The report, titled Securing Ghana’s Energy Future: Policy Actions for Sustainability and Efficiency, offers a politically grounded, time-bound blueprint aimed at stabilizing, restructuring, and future-proofing Ghana’s energy sector.

Grounded in insights from a high-level Energy Experts Boardroom Meeting convened by IPPG in Accra in February 2025, the report transcends narrow technical fixes. It presents a sequenced set of policy actions that are both politically feasible and practically implementable targeting the sector’s entrenched financial imbalances, operational inefficiencies, and institutional weaknesses.

While the Electricity Company of Ghana (ECG) remains the public’s primary reference point for the country’s power challenges, marked by erratic billing, service lapses, and spiraling debt, the IPPG report cautions against a narrow focus. Instead, it diagnoses the entire energy value chain as being under duress, from a stagnant upstream oil and gas sector and limited midstream infrastructure for gas processing, to unsustainable agreements signed by state energy institutions, and persistent technical losses across the transmission and distribution value chains. It warns that years of delayed investment, institutional fragmentation, and fiscal opacity have eroded investor confidence and placed Ghana’s long-term energy security at risk.

A particularly alarming trend, the report finds, is the persistent failure to apply sound business principles to energy planning and operations. Tariff structures that ignore actual generation costs, subsidy frameworks with no dedicated budget lines, and the inconsistent implementation of the cash waterfall mechanism (CWM) have created a liquidity trap across the energy value chain. These are not just administrative and technical oversights, the report argues, but the consequence of weak governance and political reluctance to prioritize financial discipline over expediency.

The report also points to Ghana’s underwhelming progress on renewable energy as a missed economic and environmental opportunity. Despite bold policy documents, the country remains heavily reliant on fossil fuel imports, and distributed solar power uptake has been curtailed by an ineffective net metering code, restrictive installation caps, and a lack of investor and consumer incentives. Similarly, a renegotiation of power purchase agreements (PPAs), initiated under the previous administration to ease financial pressure has yet to be fully operationalized by the current government, perpetuating unsustainable payment obligations to Independent Power Producers (IPPs).

In the short term, the report urges the NDC government to take decisive steps within the next 12 months to stabilize the sector and restore confidence. This includes strengthening ECG’s revenue collection and operational discipline. The government must also ensure the consistent implementation of the cash waterfall mechanism to improve liquidity flows and prevent the buildup of arrears owed to Independent Power Producers (IPPs). Equally important is restoring investor confidence in the upstream oil and gas sector with predictable regulatory practices and sustainable policy and regulatory incentives. Finally, the government should move swiftly to implement the renegotiated power purchase agreements (PPAs) that remain stalled, which are essential for reducing the sector’s financial burden.

Over the medium term, spanning one to three years, the report calls for institutional strengthening and policy coherence to address persistent policy and governance gaps. A key recommendation is to undertake a comprehensive energy policy audit to streamline overlapping mandates and improve coordination among key state energy institutions. Sector agencies must also be supported to build robust monitoring, evaluation, and learning systems to enhance performance accountability and policy feedback. In parallel, the government should take steps to implement Ghana’s renewable energy policies and take steps to diversify the country’s energy mix to reduce persistent reliance on costly fossil fuel imports, while incentivizing household and commercial uptake of rooftop solar and other distributed energy solutions.

In the long term, the report urges the government to pursue strategic structural reforms that will reorient the sector and its institutions towards sustainability and investment-readiness. This includes transitioning ECG into a performance-based utility with clearly defined metrics and private sector participation at the operational level while retaining public ownership. The state is urged to reconsider its role as an energy service provider to effective regulator and enabler, focused on setting clear rules, enforcing compliance, and crowding in private capital. The report also emphasizes the need to institutionalize financial discipline across the sector’s value chain and institutions.

The full report is available here: https://www.ippgafrica.org/wp-content/uploads/2025/07/IPPG-Report-Securing-Ghanas-Energy-Future-July-2025.pdf.

For more information, please contact:
Roselyn BuerkiPlahar
r.buerkiplahar@ippgafrica.org

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