Wayne Lumbasi
Ghana has taken a major step toward restoring stability in its energy sector after paying $1.47 billion in longstanding power-related debts, a move that eases financial pressures and strengthens confidence among electricity producers and suppliers. For years, unpaid bills had strained the sector, depleting guarantees, delaying payments to gas suppliers and independent power producers, and threatening the reliability of the nation’s power supply. By clearing these arrears, the government has set the stage for smoother operations and renewed trust in the sector.
A central part of this settlement was the full restoration of a $500 million World Bank Partial Risk Guarantee, which had previously been exhausted. This guarantee is crucial for protecting power purchase agreements and reducing risks for private investors, especially those involved in the Offshore Cape Three Points and Sankofa gas projects, which underpin much of Ghana’s electricity generation. Restoring the facility not only strengthens investor confidence but also unlocks opportunities for future private sector investment, signalingGhana’s commitment to meeting its obligations and maintaining credibility on the international stage.
The payments also included nearly $480 million in outstanding gas invoices owed to key suppliers, ensuring that the fuel supply for power plants remains uninterrupted. In addition, the government settled roughly $393 million in legacy debts owed to independent power producers, following renegotiations of contracts to align long-term obligations with improved financial terms. These moves were critical to guarantee continuous electricity production and reduce the risk of disruptions that had, in past years, affected households and businesses alike.
Beyond immediate relief, the debt clearance reflects a broader push for disciplined financial management in the energy sector. Strengthened mechanisms, such as the Cash Waterfall System, now help ensure that revenues are allocated efficiently across sector obligations, preventing the accumulation of new arrears. This strategy is part of a larger effort to promote sustainable energy operations, where timely payments, transparent revenue management, and clear contractual arrangements become the norm rather than the exception.
At the same time, the government’s approach is encouraging a shift toward greater domestic gas production, reducing reliance on expensive liquid fuels that have historically driven generation costs higher and contributed to revenue shortfalls. By structuring future payments around increased gas output, Ghana aims to stabilize the cost of electricity, support industrial growth, and shield the economy from fluctuations in global fuel prices.
With long-standing debts cleared and critical guarantees restored, Ghana’s energy sector is entering a new chapter of stability and predictability. Suppliers can operate without fear of delayed payments, investors are reassured, and citizens can look forward to a more reliable electricity supply, marking a decisive step toward a sustainable and secure energy future for the country.
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