Ghana government announces settlement of $1.4b energy sector debts

The Ghana government has announced that it has paid a total of $1.470 billion to settle the country’s energy sector debts within the 2025 fiscal year. It also indicated that it has restored the World Bank guarantee for the sector. The post Ghana government announces settlement of $1.4b energy sector debts appeared first on Ghana Business News.

Business Jan 12, 2026 0 1 Add to Reading List

Ghana government announces settlement of $1.4b energy sector debts

The Ghana government has announced that it has paid a total of $1.470 billion to settle the country’s energy sector debts within the 2025 fiscal year. It also indicated that it has restored the World Bank guarantee for the sector.

A statement issued by the Ministry of Finance Monday January 12, 2026 says the government has fully repaid $597.15 million, inclusive of interest, drawn on the World Bank Guarantee, adding that it settled all outstanding gas invoices, adding up to $480 million owed to ENI and Vitol for electricity generation.

The government further said it has paid approximately $393 million in legacy IPP debts.

“When President Mahama assumed office in January 2025, the energy sector had been pushed to the brink by years of persistent non-payment for gas supplied to the power sector from the Offshore Cape Three Points (OCTP) field. As a result, the World Bank Partial Risk Guarantee of $500 million had been completely depleted under the previous administration,” the statement said.

Beyond clearing inherited arrears, and through disciplined implementation of the Cash Waterfall Mechanism by the Ministry of Energy, the government has remained current on largely all IPP invoices for 2025 and is firmly committed to further improving payment performance across all IPP obligations going forward, it added.

According to the statement, the Partial Risk Guarantee (PRG), established in 2015 under the previous NDC government, was a critical safeguard that enabled nearly $8 billion in private sector investment into Ghana’s energy sector through the Sankofa Gas Project. It explained that the PRG was designed to guarantee payments to the project partners, ENI and Vitol, in the event of payment shortfalls.

“Its exhaustion represented a serious governance failure that undermined Ghana’s international credibility,” the statement said.

The statement further says as at December 31, 2025, the government fully repaid $597.15 million, inclusive of interest, drawn on the World Bank Guarantee.

According to the statement, through prudent financial management, adequate budgetary provisions have been secured to sustain timely payments going forward.

It also noted that the government has held what it describes as constructive engagements with Tullow Oil and the Jubilee Field partners, agreeing on a comprehensive roadmap to guarantee full payment for all gas off-taken.

“This approach is aimed at supporting reliable nationwide electricity generation while accelerating industrial growth. Engagements with Ghana’s upstream partners have already resulted in increased gas production, guided by a clear national vision to rapidly scale up domestic gas supply to meet the country’s growing energy demand and reduce reliance on expensive liquid fuels,” it said.

Noting that as part of its broader energy sector reset, the Mahama Administration has successfully renegotiated all Independent Power Producer agreements to secure improved value for money for the Ghanaian people, it said in 2025 alone, the government paid approximately $393 million in legacy IPP debts, further anchoring the gains made in restoring stability to the sector.

The statement gave a detailed breakdown of payments to each IPP.