The International Monetary Fund (IMF) has backed Ghana’s decision to liberalise the operations of its state-owned power distributor, the Electricity Company of Ghana (ECG), opening the door to private sector participation in a bid to strengthen the country’s struggling energy sector.
In its July 2025 country report on Ghana’s US\$3 billion Extended Credit Facility (ECF) programme, the IMF identified the energy sector as a significant source of fiscal risk, citing chronic inefficiencies, debt accumulation, and costly fuel dependence. The Fund views private sector involvement as a pathway to attracting critical investment and technical expertise necessary to resolve these long-standing structural challenges.
The ECG, which distributes electricity across six administrative regions in southern Ghana—including Greater Accra, Ashanti, Volta, Eastern, Western, and Central—has faced persistent commercial and technical losses. These issues have been exacerbated by delayed tariff adjustments, currency depreciation, and the rising cost of power generation, particularly from expensive liquid fuels.
Absent decisive policy intervention, the IMF estimates that the annual financing gap in Ghana’s energy sector could balloon to US\$2.2 billion in 2025.
“IMF staff welcomes the cabinet’s decision to open ECG’s operations to private participation,” the report stated. “We also commend the steps taken towards enhancing financial sustainability in the sector, including the reinstatement of quarterly electricity tariff reviews.”
The report highlighted recent progress, including a 14.75% electricity tariff hike in April 2025 implemented by Ghana’s Public Utilities Regulatory Commission (PURC), and partial improvements in adherence to the Cash Waterfall Mechanism (CWM)—a framework introduced to prioritise and distribute energy sector revenues.
However, the Fund noted continued inefficiencies in the system. It cited a mismatch between ECG’s reported collections (GHS5.3 billion) and validated revenues, as well as discrepancies in CWM allocations and actual disbursements (GHS3.9 billion). Some independent power producers (IPPs), the report stated, received less than anticipated, in part due to outstanding fuel payments and new entrants diluting the available funds.
To close the financial shortfall and enhance operational efficiency, the IMF urged the government to fully implement the CWM, ensure regular payments to IPPs and fuel suppliers, and address legacy arrears. It also recommended accelerating the broader Energy Sector Recovery Programme, including a multi-year tariff review that better reflects the true cost of energy production.
The Fund further emphasised the importance of improving governance, transparency, and accountability in the energy sector to bolster investor confidence and long-term sustainability.