President Mahama Unveils Bold Measures to Rescue Ghana’s Energy Sector

By Maame Efua Kwaduah
President John Dramani Mahama has unveiled sweeping reforms aimed at rescuing Ghana’s struggling energy sector, promising to restore accountability, investor confidence and reliable electricity nationwide. According to him, these measures mark a decisive turn in the country’s energy policy.
Delivering the State of the Nation address on Friday, he revealed that when his government took office in January 2025, the energy sector was “on the brink of collapse.” He said it faced a staggering GH₵80 billion debt, threatening the operational viability of key power producers. He revealed that a critical $500 million World Bank risk guarantee, established in 2015, had been fully drawn down and exhausted due to prolonged non-payment for gas consumed.
At the distribution level, he said, the Electricity Company of Ghana (ECG) was plagued by high commercial and technical losses. According to the President, the company was delivering only 62% of the energy purchased from generators while declaring less than 50% of its revenue into the cash-waterfall mechanism. These inefficiencies, he revealed, created severe liquidity shortfalls that contributed to nationwide power challenges throughout 2020.
The petroleum sector, he revealed, had faced years of policy inconsistency, regulatory inefficiencies, prolonged licensing processes, and legal disputes over field unitization, all of which had eroded investor confidence. Oil production, he noted, had declined dramatically—from 71.4 million barrels per day in 2019 to 48.2 million barrels by 2024, a drop of approximately 22%.
He assured Ghanaians that decisive action had already been taken. He revealed that by December 31, 2025, the government had fully repaid the $500 million World Bank risk guarantee, including interest, reinstating the facility in full and reaffirming Ghana’s credibility as a reliable partner on the global stage.
In addition, he revealed that between January and December 2025, all outstanding gas invoices owed to Eni and Vitol, amounting to approximately $500 million, had been settled. According to him, Ghana has also made adequate provisions to ensure timely payments for all liquid natural gas consumed going forward. To ensure fairness and equity, he said, constructive engagements with Tullow Oil and Jubilee Field partners resulted in a comprehensive roadmap guaranteeing full payments for all gas consumed, supporting nationwide electricity generation and industrial growth.
He revealed that the government has also strengthened financial oversight and accountability. A robust framework has been established to manage and monitor the implementation of the cash-waterfall mechanism, while ECG’s single holding accounts, jointly overseen by the Ministry of Energy and Green Transitions and the Public Utilities Regulatory Commission (PURC), have significantly reduced revenue leakages and enhanced the company’s ability to meet payment obligations.
Addressing the high cost of power, President Mahama revealed that the government renegotiated existing power purchase agreements with nine independent power producers, securing immediate savings of $250 million and restructuring $1.1 billion in legacy debt for repayment between 2026 and 2028. According to him, the revised agreements will be submitted to Parliament for ratification to ensure transparency and legislative oversight.
He described the legislative measures underpinning these reforms as “landmark,” noting that they were designed to decisively end waste, inflated contracts, and chronic cost overruns that had drained public resources for far too long. He revealed that the reforms include tighter procurement processes and a ban on store contracts, except in exceptional circumstances, to safeguard public funds and ensure equity.
“The government is committed to improving public trust, accountability and fairness while ensuring reliable power for all Ghanaians. Through these coordinated actions, we have cleared inherited challenges and set a clear vision for scaling up domestic gas supply, reducing reliance on expensive liquid fuels and supporting rapid industrial growth,” he said.
According to the President, these coordinated interventions are not temporary fixes but a long-term strategy. By ensuring timely gas payments, strengthening revenue management and restructuring debts, the government has laid a foundation for sustainable energy delivery and renewed investor confidence.
He revealed that, with these measures, Ghana is poised not only to stabilize its energy sector but also to foster economic growth and industrial development. The reforms, he said, signal a decisive turn in the nation’s energy policy, transforming inherited crises into opportunities for progress and stability.