Ghana’s energy sector woes are anticipated to deepen as the International Monetary Fund (IMF) announces a sector shortfall by December 2025.

The global financial institution has predicted that Ghana is estimated to lose about US$2.2 billion this year. IMF made this revelation in its July 2025 Country Report on Ghana, released as part of the Fourth Review under the Extended Credit Facility (ECF) arrangement.

According to the Fund, this reflects the Electricity Company of Ghana’s (ECG’s) large commercial and technical losses. It also attributed the anticipated loss to delayed tariff adjustments despite rising power generation costs and weak implementation of the Cash Waterfall Mechanism, which affects payments to Independent Power Producers (IPPs).

According to the IMF, the 2024 report highlighted that the Cash Waterfall Mechanism (CWM)—a framework to ensure the distribution of ECG’s revenues to stakeholders—was not implemented according to its guidelines, with significant deviations between ECG’s validated and declared collections (GHS 5.3 billion) and between CWM allocations and actual payments (GHS 3.9 billion).

Currently, the concern of most analysts is that despite the many taxes paid by petroleum consumers, the country’s energy sector debt will not record a signficant decline anytime soon. Amid this, the IMF has commended the government over progress in addressing the energy sector crisis.

These included the Public Utilities Regulatory Commission (PURC)’s 14.75% increase in electricity tariffs in April 2025, after having maintained tariffs unchanged in December 2024 and March 2025, and the Cabinet approval of opening power distribution to private sector participation (end-September 2025).

The publication of the 2023 Quarter 4 and 2024 ECG Revenue/Collection Accounts Validation Reports (end-January 2025) was completed with a delay because it covered a period longer than envisaged.

Even though there was some improvement, the money that some Independent Power Producers (IPPs) received from the fund was less than expected. This was because fuel payments had to be made, and a new IPP was added, which reduced the amount available for others.

However, the 2025 budget has allocated GH¢27.1 billion (around US$1.7 billion) to cover the shortfall, assuming that policy actions will be taken to help reduce it. Among the measures are the resumption of quarterly tariff adjustments and the accelerated implementation of the Energy Sector Recovery Programme measures.

This includes doing a multi-year tariff assessment (called MYTO) by the end of September 2025 to make sure electricity prices match the real cost of producing energy. It also involves improving how money is collected from customers and reducing the amount of unpaid bills that pile up over time.

Ghana’s energy sector crisis has been a long-standing challenge over the years, with Finance Minister Ato Forson describing it as a “ticking time bomb.” During a speech at the first session of the two-day National Economic Dialogue at the Accra International Conference Centre in March, Dr. Forson warned that the sector’s financial deficits could exceed nine billion dollars by 2026, despite government interventions.

“Currently, only 62 per cent of total energy purchases by ECG are collected, leaving out probably 62 per cent. 65 per cent of that amount is used to pay for supplies through the cash quarter for the mechanism,” Dr. Forson stated.

“Unfortunately, 35 per cent of ECG’s revenue is used to take care of ECG themselves over time that they don’t actually work,” he added.

Also, the government has introduced the GH¢1 per litre charge on petrol, diesel, and other petroleum products. It is to raise funds to clear energy sector debts, especially those owed to Independent Power Producers (IPPs). The levy, labelled as the fuel levy, was initially announced and later withdrawn following pushback from drivers and mainly the minority, citing economic burden on the ordinary Ghanaian.

Consequently, on June 15, the government suspended the levy, following a directive from President John Dramani Mahama to delay rollout due to global oil price volatility and public concerns.

Following the demands of timelines to ensure transparency by the Chamber of Petroleum Consumers (COPEC) and the GPRTU, the government confirmed the levy would now take effect on July 16, 2025.