- Jinapor Says Ghana Needs Financially Sustainable Power System, Not Just More Generation
Ghana is seeking to use a new phase of cooperation with the World Bank to accelerate energy-sector reforms as the government tries to tackle one of the country’s most persistent sources of fiscal pressure.
Energy and Green Transition Minister John Abdulai Jinapor has placed energy security, financial sustainability and investment mobilisation at the centre of discussions around Ghana’s next Country Partnership Framework with the Bank.
The broader objective is to move the power sector away from recurring financial stress and towards a model capable of supporting industrial growth without repeatedly turning to the national budget for rescue.
The reform push reflects a problem that Ghana has struggled with for more than a decade. The country has added significant generating capacity, but greater availability of power has not automatically created a financially sustainable electricity market because of the persistent gap between the cost of producing and distributing electricity and the ability of utilities and consumers to pay for it.
The result has been a chain of financial weakness stretching from fuel suppliers and independent power producers through state-owned utilities and ultimately to government.
Mr Jinapor’s emphasis suggests that government now sees the problem less as one of insufficient generation and more as a failure in the economics of the sector. The reform agenda includes a stronger transition towards gas-to-power, which the minister sees as a way of reducing generation costs and improving reliability.
But the economics of gas depend on dependable supply, processing and transportation infrastructure and, critically, a payment system capable of ensuring that suppliers and generators are actually paid.
That is where energy reform meets Ghana’s broader fiscal consolidation programme. When utilities accumulate arrears or cannot meet obligations, the liabilities frequently migrate to government through direct support, guarantees or delayed payments, turning commercial weakness into sovereign exposure.
These contingent liabilities may sit outside the headline budget initially, but they can eventually reappear as public debt or additional expenditure.
The government’s challenge is therefore to prevent the power sector from undermining the credibility of the fiscal reset. Ghana is under pressure to demonstrate that consolidation is structural rather than temporary, which means reducing not only conventional budget deficits but the off-balance-sheet risks that can later return to government.
Allowing energy-sector arrears to accumulate while celebrating fiscal improvement elsewhere would merely postpone rather than solve the problem.
The World Bank partnership could provide technical and institutional support for that deeper restructuring. Its significance lies not only in financing power infrastructure but in helping government address governance, operational and financial weaknesses across the sector.
The aim, as set out in the document, is to move away from isolated project financing towards reforms capable of changing how the entire energy system functions.
The stakes extend well beyond electricity companies themselves. Manufacturing, mining and mineral-processing projects all require reliable power at competitive prices, while Ghana’s ambition to retain more value from gold and other minerals depends on whether energy-intensive industries can operate commercially.
A country may have the mineral resources and investment interest required for industrialisation, but those advantages are weakened if electricity costs are unpredictable or supply is unreliable.
Small and medium-sized businesses are particularly exposed because they have less capacity than large companies to absorb rising electricity or fuel costs. For these firms, power reliability can determine whether production is commercially viable, whether orders are delivered on time and whether margins survive.
A financially weak energy system therefore imposes costs far beyond the balance sheets of ECG or other sector institutions, affecting productivity, inflation, investment and employment.
The government must nevertheless balance three difficult objectives: affordability for households, financial viability for utilities and sufficient returns to attract private investment. If tariffs remain artificially low, utilities can accumulate losses; if they rise too rapidly, households and businesses face higher costs and inflationary pressure; and if investors perceive payment risk as excessive, the cost of financing new power projects rises.
The reform problem is therefore less about choosing one objective over another than building a system in which all three can coexist sustainably.
Governance will be central to whether that balance is achieved. The document calls for stronger revenue collection, lower technical and commercial losses, improved procurement, timely payments and tighter financial discipline across state-owned energy institutions.
It also argues for clearer separation between social policy and commercial operations so that subsidies for vulnerable consumers are transparently budgeted rather than hidden inside utility accounts.
That separation would make the real financial condition of the power sector easier to understand. If government chooses to subsidise electricity for social reasons, the cost should be visible in the budget rather than appearing as unpaid obligations elsewhere in the energy chain. Transparent subsidies can be debated, targeted and financed; hidden subsidies eventually become arrears.
The green-transition agenda adds another layer of complexity. Ghana cannot rely indefinitely on conventional thermal generation if it intends to meet its climate and energy-transition objectives, meaning renewable energy, storage, transmission upgrades and better demand management will increasingly need to form part of the national power mix.
Yet those technologies still require capital, grid integration and predictable regulation, meaning environmental ambition must be matched by commercially credible implementation.
That is why financing alone will not solve the problem. Ghana has shown that it can build power plants, transmission lines and gas infrastructure, but the more difficult task has been creating institutions capable of operating and financing those assets efficiently over time.
Mr Jinapor’s reform agenda will therefore be judged less by the volume of new investment announced than by whether financial leakages across the sector are actually reduced.
If the reforms work, the economic dividend could be significant. A financially sustainable electricity system would reduce pressure on government finances, strengthen investor confidence, lower operational risk for businesses and improve the foundations for industrial expansion. It could also allow energy companies to finance more of their own investment rather than repeatedly relying on the state.
The larger policy objective is therefore not simply to produce more megawatts. Ghana needs an energy sector that is reliable enough for industry, affordable enough for households and disciplined enough financially not to become a recurring threat to fiscal stability.
The World Bank engagement gives government another opportunity to pursue that restructuring, but the test will be whether reforms finally break the cycle in which sector losses migrate to taxpayers and whether energy can become an engine of productivity rather than a recurring fiscal risk.
