IMF signals private takeover of ECG as Ghana pushes power sector reforms

Ghana’s electricity distribution business is set for a major shake-up, with the Electricity Company of Ghana (ECG) expected to be handed over to a private sector operator under ongoing energy sector reforms, the International Monetary Fund (IMF) has disclosed.

In its latest Staff Report on Ghana, the Bretton Woods institution said preparations are underway to bring private participation into electricity distribution, noting that by the end of 2025, a transaction advisor is expected to be engaged to manage the selection of private concessionaires.

The IMF observed that the energy sector is showing signs of stabilisation, pointing to a sharp increase in ECG’s payments to Independent Power Producers (IPPs) through the cash waterfall mechanism.

According to the report, ECG paid US$308 million to IPPs in the first half of 2025 alone, nearly matching the US$325 million paid throughout the whole of 2024.

Despite the improved payment performance, outstanding obligations remain substantial.

As of end-June 2025, net payables to IPPs stood at US$1.2 billion, representing an increase of US$71 million compared to the end of 2024. However, arrears owed to fuel suppliers declined by US$124 million over the same period, settling at US$830 million.

The Fund explained that the rise in payables to IPPs during the first half of 2025 was mainly due to significantly reduced direct government payments to power producers, which outweighed the increase in ECG’s own payments.

Government, IPPs Agree to Debt Restructuring

As part of broader efforts to restore sustainability in the energy sector, the IMF revealed that the government and IPPs have reached an agreement to restructure legacy debts.

In the third quarter of 2025, the government concluded negotiations with nine IPPs—accounting for nearly all outstanding net payables as of end-June—on a comprehensive repayment plan covering arrears accumulated up to that date.

The agreement includes haircuts ranging between 15 and 30 percent, upfront payments of about US$300 million in 2025, and biannual payments of the remaining balances from 2026 to 2029.

Under the deal, upfront payments will cover between 10 and 100 percent of each IPP’s post-haircut claims, depending on individual agreements.

The IPPs have also agreed to revised power purchase agreements (PPAs), which are expected to lower electricity generation costs and ease pressure on the sector going forward. These revised agreements were approved by Parliament in November 2025, replacing earlier PPAs that collapsed after the government defaulted on payments in 2024.

Separately, the IMF noted that government plans to clear its arrears with Sankofa—Ghana’s largest gas supplier and the source of more than half of outstanding fuel supply debts—by April 2026, marking another key step in addressing long-standing energy sector liabilities.