Renegotiated IPP Deals Are Insufficient to Stabilise Ghana’s Power Sector – ISSER

By Praisebell Rosemond Larbi

The Institute of Statistical, Social and Economic Research (ISSER) has cautioned that the government’s renegotiated power agreements with Independent Power Producers (IPPs), though fiscally beneficial, are not enough to deliver long-term stability to Ghana’s troubled energy sector.

Presenting its analysis at the Institute’s Post-Budget Discussion on Wednesday, November 19, 2025, ISSER noted that while the revised agreements provide short-term breathing space, the sector’s fundamental challenges remain unaddressed.

In the 2026 Budget, government disclosed that it had renegotiated all existing IPP power purchase agreements, unlocking more than US$250 million in savings and restructuring GH¢1.1 billion in energy-sector debt over the next four years. But ISSER stressed that these gains, though welcome, do not resolve the deeper structural weaknesses undermining the sector.

Director of ISSER, Professor Robert Darko Osei, highlighted persistent and substantial losses within the power transmission and distribution system as a central cause of the sector’s recurring financial distress.

“Your transmission and distribution losses are huge. Our transmission losses are around 27% or so. That is significant,” he said.

Prof. Osei acknowledged that the Electricity Company of Ghana (ECG) had improved its commercial loss management and overall revenue performance. However, he argued that these improvements are far from adequate to restore the sector to a sustainable footing.

“That is not to say that you can get away with such high transmission costs. So the ECG discussions will have to go on,” he added.

According to ISSER, unless Ghana undertakes deep structural reforms, especially in the distribution chain, the country risks returning to the same cycle of debt and emergency interventions, even after renegotiating with IPPs.

“If we don’t get our distribution right… we’ll still negotiate with the IPPs and pay, spreading our debts over a longer period. But we’ll still have debt to pay because it will not translate to making the IPPs profitable,” Prof. Osei warned.

ISSER concluded that the fiscal space created by the renegotiated agreements must be strategically used to strengthen sector governance, reduce technical losses, and build a long-term pricing and planning framework that supports industrial growth and ensures reliable power supply.