The International Monetary Fund (IMF) has thrown its support behind the Government of Ghana’s decision to open up the operations of the Electricity Company of Ghana (ECG) to private sector participation.
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The move is expected to bring in essential investment and expertise to resolve legacy debts and inefficiencies in the country’s power sector.
In its July 2025 country report under the fourth review of Ghana’s $3 billion Extended Credit Facility (ECF), the IMF described the energy sector as a major fiscal risk. Without corrective measures, the sector’s financial shortfall could hit $2.2 billion by 2025, the report warned.
Reasons for Support
The Fund identified ECG’s persistent technical and commercial losses, delayed tariff adjustments, and rising power generation costs, due in part to heavy reliance on liquid fuels, as key factors worsening the sector’s financial health.
“Staff welcomes the Cabinet’s decision to open the electricity company’s operations to the private sector,” the IMF stated, applauding recent efforts such as:
- A 14.75% electricity tariff hike in April 2025
- Steps to revive the Cash Waterfall Mechanism (CWM), a payment system for distributing revenue among sector players
Gaps and Recommendations
Despite the improvements, the IMF flagged ongoing issues:
- GHS 5.3 billion in validated ECG collections contrasted with actual CWM distributions of only GHS 3.9 billion
- Inconsistent payments to Independent Power Producers (IPPs)
- Fuel supply arrears and transparency challenges
The Fund urged a full implementation of the CWM, regular payments to IPPs, improved governance, and accelerated reforms under the Energy Sector Recovery Programme. It also called for a multi-year electricity tariff review by September 2025 to align pricing with production costs.
A Look Back and Forward
Nana Amoasi VII, Executive Director of the Institute for Energy Security, also backed the move but cautioned that any privatisation deal must be transparent and well-structured.
He referenced the failed 2019 Power Distribution Services (PDS) deal, which led to the loss of $190 million under the Millennium Challenge Corporation (MCC) Compact.
While the MCC currently has no active plans, CEO Alice Albright has expressed openness to future collaboration on infrastructure and financial sustainability.
