ISSER Says Structural Reforms not Renegotiated IPP Deals will Determine Stability of Ghana’s Energy Sector
The Institute of Statistical, Social and Economic Research (ISSER) has cautioned that the government’s recently renegotiated power purchase agreements (PPAs) with Independent Power Producers (IPPs) offer only temporary relief and will not, on their own, resolve the deep-rooted challenges undermining Ghana’s energy sector.
In the 2026 Budget, government disclosed that it had successfully renegotiated all existing PPAs, securing over US$250 million in fiscal savings and restructuring GH¢1.1 billion in energy-sector debt expected to be cleared over the next four years. The Finance Ministry described the move as a key component of broader efforts to restore financial discipline within the sector.
But speaking at ISSER’s Post-Budget Discussion on Wednesday, November 19, 2025, Director Prof. Robert Darko Osei underscored that the renegotiations address only a fraction of what continues to drive the sector’s persistent indebtedness.
According to him, Ghana’s transmission and distribution inefficiencies—particularly system losses—remain a major drain on sector finances. “Your transmission and distribution losses are huge. Our transmission losses are around 27% or so. That is significant,” Prof. Darko Osei said.
He acknowledged improvements in commercial losses and the Electricity Company of Ghana’s (ECG) recent revenue performance but maintained that the gains are inadequate to reverse the sector’s financial decline. “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.
Prof. Osei argued that without a comprehensive restructuring of the distribution segment, the benefits of the IPP renegotiations will be short-lived. “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,” he warned.
ISSER concluded that the fiscal space created through the renegotiations should be channelled into long-term structural reforms, including improved governance, reduction of technical losses, and the establishment of a sustainable pricing and planning framework capable of supporting industrial expansion and shielding the sector from repeated cycles of debt.
