Ghana to Spend Over $1 Billion on Liquid Fuel for Power in 2025
Ghana may spend more than US$1 billion on liquid fuel to keep its thermal power plants operational in 2025, Minister for Energy and Green Transition, John Jinapor, has disclosed.
This rising expenditure, he noted, is due to increasing electricity demand – projected to grow by 300 megawatts annually – and the country’s continued reliance on expensive liquid fuels such as diesel, light crude oil and heavy fuel oil (HFO) to fill a persistent gas supply gap.
“This is unsustainable,” Mr. Jinapor said at the inauguration of Technical and Steering Committees for the construction of Ghana’s second gas processing plant (GPP2) in Accra. “Currently, liquid fuel is not even part of the tariff structure, and yet we’re forced to depend on it due to our gas deficit.”
According to the minister, Ghana faces a daily gas shortfall of about 100 million standard cubic feet (MMscf), compelling the state to resort to costly liquid fuels to sustain thermal power generation.
To address this, government has commenced construction of GPP2 – a move he described as a strategic intervention aimed at stabilising the power sector and saving the country significant foreign exchange. “With the new plant, we expect to save up to US$500 million annually. This means that in just two years, the plant would pay for itself,” Mr. Jinapor explained.
The new gas facility is expected to boost domestic gas supply, reduce natural gas flaring, and support the wider energy transition agenda. It is also anticipated to spur employment creation and improve availability of Liquefied Natural Gas (LNG) and Liquefied Petroleum Gas (LPG).
Independent Power Producers (IPPs), who currently rely on government for fuel payments, continue to pressure authorities over outstanding arrears. The Energy Minister believes the GPP2 initiative will help reduce the financial burden on government and improve payment terms across the power value chain.
Chairing the Steering Committee, Minister for Finance, Dr. Cassiel Ato Forson, echoed concerns about the country’s growing gas deficit and lamented the lack of investment in critical gas infrastructure in recent years.
“Without the Atuabo Gas Processing Plant, we would have faced even greater challenges. I’m surprised the previous administration, after years of talking, did not commence this second facility,” he said.
Dr. Forson reiterated that two years of savings from using gas instead of liquid fuels would fully finance the construction of GPP2. He urged the Technical Committee to fast-track its work and ensure timely selection and commissioning of a contractor for the project.
Meanwhile, think tank Africa Centre for Energy Policy (ACEP) has raised questions over the omission of GPP2 and its financing structure in the 2025 Budget. In its ‘2025 Budget Insights’ report, ACEP criticised the lack of clarity on the project’s funding – especially after Cabinet reportedly approved the plant’s development.
ACEP also flagged concerns over cost benchmarks, referencing a previous proposal to develop a similar facility at an estimated US$800 million, which it argued was more than double the global benchmark for such projects.
“The Ghana Upstream Petroleum Chamber estimates that Ghana lost about US$290 million from gas flaring in 2023. Projects like GPP2 should help commercialise flared gas – but we must ensure value-for-money by avoiding inflated project costs,” ACEP stated.
The think tank urged greater transparency and competitive bidding in future infrastructure developments to ensure Ghana does not overpay for critical energy assets.
The GPP2 project is thus emerging as a key piece in Ghana’s energy infrastructure with the potential to ease pressure on the national grid, support fiscal stability, and accelerate the country’s transition to cleaner and more sustainable energy sources.
