Government Reaffirms 1,200MW State-Owned Power Plant to Cut Energy Costs

Government has reaffirmed its commitment to construct a 1,200MW state-owned power plant as part of Ghana’s renewed Gas-to-Power transformation policy aimed at stabilizing the energy sector and conserving foreign exchange.Finance Minister Cassiel Ato Forson made the announcement in the Parliament of Ghana, stressing that the large-scale power project remains central to government’s strategy to reposition the electricity sector on a more sustainable footing.“The implementation of the Gas-to-Power transformation policy will also significantly conserve the country’s foreign exchange reserves, making way for sustainable reserve accumulation.” Finance Minister Cassiel Ato Forson statedThe 1,200MW state-owned power plant, he explained, is intended to anchor Ghana’s transition from reliance on costly imported light crude oil to the use of domestically produced natural gas for power generation.Transitioning from Expensive Oil to Domestic GasAccording to the finance minister, the shift under the Gas-to-Power policy is not merely a technical adjustment but a structural reform designed to reduce generation costs and protect the national purse.For years, segments of Ghana’s thermal power generation have depended on light crude oil, exposing the country to global price volatility and foreign exchange pressures. The new policy seeks to reverse that trend by prioritizing natural gas sourced locally.Dr. Forson stressed that the transition would significantly cut generation costs while strengthening foreign exchange reserves by lowering the need for fuel imports.Officials project that the reform could reduce power generation costs by at least 75 percent. Such a reduction, government believes, would ease the fiscal burden on the national budget and create space for broader economic investments.Beyond financial savings, the policy is also expected to lower carbon emissions within the electricity sector, contributing to Ghana’s climate commitments and cleaner energy mix.Broader Gas Infrastructure ExpansionThe reaffirmed plan for the 1,200MW state-owned power plant forms part of a wider package of energy sector reforms.Dr. Forson indicated that government also intends to construct a second gas processing facility to strengthen domestic gas supply capacity.Expanding gas processing infrastructure is seen as essential to ensuring adequate feedstock for thermal plants operating under the Gas-to-Power framework.In addition, the Minister outlined plans for a comprehensive revamp of the oil and gas sector aimed at attracting fresh upstream petroleum investment.Energy analysts note that increased exploration and production activity would be critical to sustaining gas supply over the long term and supporting the expanded generation capacity envisioned under the policy.Civil Society Urges Speed on Atuabo PlantCivil society organisations operating in Ghana’s energy sector have welcomed the renewed focus on gas infrastructure but are urging government to accelerate the construction of a Second Gas Processing Plant at Atuabo.They describe the facility as vital for ensuring sustainable power generation and long-term energy security.Industry observers argue that expanding gas processing capacity would enhance reliability in fuel supply to thermal plants and reduce the risk of disruptions that have historically contributed to power instability.The alignment between government policy and CSO advocacy reflects a shared recognition that domestic gas utilisation is key to addressing structural challenges in the power sector.Clearing Legacy Debts and ShortfallsTo reinforce the broader reform agenda, government has allocated substantial resources to address longstanding financial constraints within the energy sector.Dr. Forson disclosed that GH¢15.2 billion has been set aside to tackle accumulated shortfall payments in the sector.An additional GH¢4.8 billion has been earmarked in 2026 to clear legacy debts owed to Independent Power Producers (IPPs).Energy sector debt has been a persistent challenge, often affecting liquidity and undermining investor confidence. By addressing arrears and shortfalls, government aims to stabilize the sector’s financial architecture and ensure uninterrupted power supply.Government’s reaffirmation of the 1,200MW state-owned power plant signals a strategic shift in Ghana’s approach to electricity generation.If executed effectively, the reform could mark a turning point in Ghana’s energy history, reinforcing domestic resource utilization, strengthening foreign exchange reserves and laying the foundation for a more secure and cost-efficient electricity system.