Ghana is proceeding with a 1,200-megawatt (MW) gas-fired power plant to enhance electricity supply and decrease mounting costs. This state-owned project will be Ghana's largest power facility. It aims to reduce financial losses within the nation's electricity industry.
The plant will be constructed at Kafodzidzi-Abrobeano in the Central Region. Its 1,200 MW capacity will surpass the 1,020 MW Akosombo hydroelectric facility. Finance Minister Cassiel Ato Forson confirmed the project's viability following feasibility studies. Environmental, engineering, and permitting work is currently underway. The first 600 MW phase is expected to begin operations in 2028.
This significant investment addresses Ghana's persistent power sector challenges. The World Bank estimates delays in energy-sector recovery programmes cost Ghana about GHS 14.7 billion ($1 billion) each year. The International Monetary Fund (IMF) projects the sector's financing shortfall will reach GHS 16.2 billion ($1.1 billion) in 2026. This shortfall reflects collection losses, distribution problems, and costly power-generation contracts. The new plant seeks to alleviate these financial pressures.
Finance Minister Cassiel Ato Forson highlighted the project's potential impact. He stated the plant could reduce generation costs. This reduction could support a 10% to 20% decline in electricity tariffs for consumers. Ghana has also secured gas turbines from GE Vernova. The government estimates these direct purchases will save 35% to 45% compared to third-party acquisitions. This strategic procurement underscores efforts to manage project expenses efficiently.
Ghana's power sector has long struggled with financial sustainability. The country has faced years of unpaid bills and losses at utility companies. It also contends with contracts requiring payments even when power is not needed. The energy-sector shortfall was about GHS 20.6 billion ($1.4 billion) in 2025. It is expected to remain above GHS 14.7 billion ($1 billion) in 2026. This new plant represents a crucial step in addressing these deep-seated issues.
The government has made some progress in recent years. It has paid about GHS 21.6 billion ($1.47 billion) of legacy energy debt. Payments to independent power producers have also improved. Furthermore, Ghana saved approximately GHS 7.3 billion ($500 million) over the past year. This saving resulted from replacing imported liquid fuel with domestic natural gas for thermal generation. The new 1,200 MW plant builds on this shift towards more cost-effective gas-fired power.
Financing this large-scale project without increasing public debt remains a key challenge. Ghana is currently undergoing fiscal reforms following its debt crisis. This limits the government's ability to fund new infrastructure solely from its budget. Minister Forson has advocated for diverse financing mechanisms. These include guarantees, blended finance, local-currency funding, capital markets, and public-private partnerships. Such approaches aim to attract necessary investment while safeguarding fiscal stability.
The success of the new plant depends on several factors. These include consistent gas supply and generation costs below existing alternatives. Beyond adding capacity, Ghana needs utilities to improve revenue collection. They must also reduce distribution losses and maintain tariffs that cover more of the electricity cost. This holistic approach is essential for achieving long-term energy sector stability and affordability.