Ghana’s energy sector recorded a financial shortfall of US$1.4 billion in 2025, equivalent to 1.2 percent of GDP, despite consumers absorbing a cumulative electricity tariff increase of about 40 percent since March 2025, according to the Institute of Economic Research and Public Policy (IERPP).
IERPP says the latest figures contained in the International Monetary Fund’s (IMF) July 2026 Selected Issues paper on Ghana raise serious questions about whether higher electricity tariffs are translating into meaningful improvements in the financial and operational performance of the energy sector.
The institute is therefore demanding answers from government on a basic question: If households and businesses are paying significantly more for electricity, where is the additional money going?
Energy sector shortfall barely improved
According to IERPP’s review of the IMF report, Ghana’s energy sector shortfall fell only marginally from US$1.6 billion, or 1.4 percent of GDP, in 2024 to US$1.4 billion, or 1.2 percent of GDP, in 2025.
IERPP argues that the improvement should not be interpreted as evidence of major structural reforms.
The IMF attributed the reduction primarily to improved macroeconomic conditions and a stronger cedi, rather than significant improvements in the sector’s operational performance or revenue collection.
For IERPP, this distinction is critical.
“In plain terms: a favourable exchange rate bailed the sector out, not government reform.”
The institute says the figures suggest that the fundamental weaknesses affecting Ghana’s electricity sector remain largely unresolved.
$1.7 billion owed to power producers and fuel suppliers
The financial pressures within the sector remain substantial.
Outstanding payables to power producers and fuel suppliers stood at approximately US$1.7 billion, equivalent to 1.5 percent of GDP, at the end of 2025.
The figure had reportedly peaked at about US$2.2 billion, or 1.9 percent of GDP, earlier in 2025.
IERPP says the continued accumulation of liabilities raises questions about the sustainability of the sector’s financial model, particularly when consumers have already been required to absorb substantial tariff increases.
Electricity distribution losses remain at 27%
One of the biggest concerns identified by IERPP is the persistence of electricity distribution losses.
The institute says distribution losses remained at approximately 27 percent, meaning that a significant share of electricity generated does not translate into revenue for the sector.
According to IERPP, the figure has remained broadly unchanged for years despite investments and initiatives, including World Bank-backed smart metering and billing upgrades.
The institute argues that reducing these losses should be a central component of any credible effort to restore the financial health of Ghana’s energy sector.
Government agencies account for 16% of sector arrears
IERPP also highlights the level of unpaid electricity bills owed by government institutions.
The IMF report indicates that unpaid bills from government’s Ministries, Departments and Agencies (MDAs) accounted for about 16 percent of total sector arrears at the end of 2025.
The institute says this means government itself is responsible for a significant portion of the unpaid electricity bills while simultaneously asking households and businesses to absorb higher tariffs.
IERPP describes this as a problem within government’s direct control rather than one caused by external market conditions.
IERPP questions the pace of electricity sector reforms
IERPP acknowledges that some of Ghana’s energy sector challenges were inherited. However, the institute argues that the current National Democratic Congress (NDC) administration had the whole of 2025 to begin addressing the structural weaknesses.
Instead, IERPP says, government relied heavily on higher electricity tariffs while reforms aimed at tackling distribution losses, improving collections and increasing private-sector participation progressed more slowly.
The IMF report, according to IERPP, also indicates that the transaction advisor required to operationalise private-sector participation in electricity distribution had not yet been appointed at the time of the report.
Although a framework for private-sector participation had been adopted, IERPP says there had been limited evidence of implementation on the ground.
Three structural problems continue to undermine the sector
IERPP says the IMF’s assessment points to three interconnected problems:
Electricity tariffs that do not adequately cover sector costs
High electricity distribution losses
Incomplete collection of electricity bills
The institute argues that increasing tariffs addresses only one of these problems.
Without simultaneously reducing distribution losses and improving bill collection, IERPP warns that additional tariff increases could simply increase the amount of money flowing into a system that continues to lose significant revenue.
The institute says this creates a cycle in which consumers are repeatedly asked to pay more without seeing corresponding improvements in efficiency and financial sustainability.
IERPP demands action from government
IERPP has outlined a series of measures it wants government to implement to address the energy sector’s financial and operational challenges.
