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Ghana’s Energy Sector Restores Investor Confidence After Major Debt Offset - 2026



Ghana’s Energy Sector Debt: From Depletion and Missed World Bank Financing to Restored Confidence

Ghana’s energy sector has long been both a driver of economic growth and a source of fiscal strain. Over time, weak payment discipline, tariff shortfalls and mounting arrears pushed the sector into deep financial distress eventually undermining international guarantees and costing the country access to critical development financing. Read about the history of Ghana's energy sector debt

The recent announcement by the Ministry of Finance that Government has paid US$1.47 billion to clear energy sector debt and fully restore the World Bank Partial Risk Guarantee (PRG) marks a historic turning point. To understand its significance, the evolution of the crisis must be traced chronologically.

The Build-Up of Energy Sector Debt

As detailed in earlier analyses on Energy Insights Ghana, Ghana’s energy sector debt accumulated over several years due to persistent non-payment to gas suppliers and Independent Power Producers (IPPs).

Thermal power generation particularly gas supplied from the Sankofa Field continued even as payment arrears mounted, exposing Government to significant contingent liabilities. By the early 2020s, the sector had become one of the largest threats to Ghana’s fiscal stability.

The ₵1 Per Litre D-Levy: A Partial Stabiliser

In response, Government strengthened the Energy Sector Levies Act (ESLA), including the ₵1 per litre fuel levy, aimed at creating a dedicated revenue stream to service energy debts. Read about the 1Ghc levy to help stabilise the energy sector policy

Analysis on EnergyInsightsGH.com shows that the levy significantly improved cash inflows and slowed the growth of arrears. However, while effective as a stabilisation tool, it was insufficient to fully offset legacy debts and interest accumulation, especially given rising payment obligations to gas suppliers.

Depletion of the World Bank PRG and Missed Financing

One of the most damaging outcomes of prolonged non-payment was the complete exhaustion of the World Bank Partial Risk Guarantee (PRG) a facility that had underpinned nearly US$8 billion in private investment in Ghana’s energy sector.

Once the guarantee was depleted, Ghana lost access to further World Bank-backed energy support. The country missed out on potential World Bank-linked financing, including follow-on support and energy-sector-related budgetary assistance temporarily.

This depletion significantly weakened Ghana’s credibility with international financiers and stalled fresh investment inflows.


Debt Clearance and Restoration of Confidence

Following the assumption of office by President John Dramani Mahama in January 2025, the energy sector was prioritised as a macro-critical risk.

Between January and December 2025, Government:

  • Fully repaid US$597.15 million (including interest) drawn on the World Bank PRG

  • Settled approximately US$480 million in outstanding gas invoices owed to ENI and Vitol

  • Re-engaged Jubilee Field partners to establish a sustainable payment framework

By 31 December 2025, the PRG was fully restored reopening Ghana’s access to concessional financing and reaffirming its standing as a credible investment destination.

Conclusion

Ghana’s energy sector journey from debt accumulation, through partial relief via the ₵1 per litre levy, to the loss of international financing and finally to full debt clearance offers critical lessons in fiscal discipline and sector governance.

As consistently argued on EnergyInsightsGH.com, sustainable energy sector reform will require more than emergency payments. It demands transparency, predictable payment mechanisms, and long-term structural discipline to prevent a recurrence of this costly cycle. 

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