The International Monetary Fund (IMF) has thrown its support behind the government’s decision to liberalise the operations of the Electricity Company of Ghana (ECG) to allow private sector participation.

According to the Fund, this move could attract the critical investment and technical expertise needed to tackle longstanding debts and ensure financial sustainability in Ghana’s energy sector.

The endorsement came in the IMF’s July 2025 country report, which reviewed progress under Ghana’s US$3 billion three-year Extended Credit Facility (ECF) programme.

The report identified the energy sector as a key source of fiscal risk, underscoring the urgency of reforms.

ECG, the state-owned utility responsible for electricity distribution across six administrative regions—Greater Accra, Eastern, Volta, Ashanti, Western, and Central—has struggled with mounting commercial and technical losses.

The Fund estimates that, without decisive policy interventions, the sector’s annual shortfall could rise to US$2.2 billion by 2025.

Contributing to this gap are delayed tariff adjustments amid currency depreciation, rising power generation costs, and continued dependence on expensive liquid fuels.

"The IMF staff welcomes the cabinet’s decision to open ECG operations to private sector participation, alongside efforts to strengthen the sector’s financial footing—including the resumption of quarterly tariff reviews,” the report stated.

Progress has already been made, including a 14.75 percent electricity tariff increase implemented by the Public Utilities Regulatory Commission (PURC) in April 2025, and partial improvements in compliance with the Cash Waterfall Mechanism (CWM)—a framework used to ensure equitable and transparent disbursement of energy revenues.

Despite these strides, challenges persist. The report cited significant gaps between ECG’s validated and declared collections (GHS5.3 billion) and between expected and actual disbursements under the CWM (GHS3.9 billion).

Some Independent Power Producers (IPPs) reportedly received less than anticipated, partly due to the inclusion of a new IPP and fuel payment obligations that diluted the available funds.

To address these shortfalls, the IMF recommends the full and consistent implementation of the CWM, regular payments to IPPs and fuel suppliers, clearance of legacy arrears, and improved governance and accountability within the sector.

The Fund also urged the government to fast-track the Energy Sector Recovery Programme, including a multi-year tariff review to reflect evolving production costs by the end of September 2025, enhanced revenue collection efforts, and stricter control of arrears.

Energy experts echo the IMF’s call for reforms. In an earlier interview with the Ghana News Agency, Nana Amoasi VII, Executive Director of the Institute for Energy Security, noted that private participation could bring in much-needed efficiency, investment, and technical capacity.

However, he cautioned against repeating past mistakes, referencing the failed 2019 Power Distribution Services (PDS) deal, which led to the loss of a US$190 million second tranche under the Millennium Challenge Corporation (MCC) compact.

While MCC CEO Alice Albright, speaking on May 9, 2024, confirmed that the Corporation had no immediate plans to re-engage, she left the door open for future collaboration aimed at strengthening Ghana’s energy infrastructure and financial resilience.

The IMF’s backing of ECG liberalisation signals growing international confidence in Ghana’s energy sector reforms—but also underscores the need for transparency, accountability, and strong regulatory oversight to avoid past pitfalls.