The World Bank has downgraded Ghana’s Energy Sector Recovery Programme from “Moderately Satisfactory” to “Unsatisfactory”. This decision comes after the Bank identified significant financing delays, weak implementation, and worsening utility losses.
These issues are undermining efforts to restore financial stability in Ghana’s energy sector. The downgrade marks a major setback for Ghana. The country has long tried to stabilize its electricity sector, which faces persistent revenue shortfalls and high losses.
Ghana’s energy challenges often burden public finances through subsidies and bailout packages. This situation impacts the national budget. Data from the Bank of Ghana frequently highlights energy sector debt as a fiscal risk. For example, the 2023 financial stability report noted the continued strain of state-owned enterprises, including those in the power sector, on government resources. The delays in reforms threaten to worsen an already precarious situation.
The World Bank’s recent assessment specifically blamed delayed funding approvals from the Ministry of Finance. Election-related disruptions, stricter procurement controls, and slow execution by implementing agencies also contributed to the downgrade. The Bank stated that these bottlenecks slowed essential reforms designed to improve efficiency at the Electricity Company of Ghana (ECG).
These reforms aim to cut sector losses and strengthen the overall financial health of the power sector. For instance, ECG’s collection efficiency has fallen to 85%. This is below both its starting point and the 93% target for 2027. This means ECG collects less revenue at a critical time for the sector.
The combined financial losses of ECG and the Northern Electricity Distribution Company (NEDCo) have widened significantly. Their losses now total approximately US$1.5 billion. This amount is nearly three times the programme’s targeted level of US$525 million by the end of next year. This points to the fragility of Ghana’s electricity sector recovery. If these losses continue, they will likely return to the national budget. This could be through subsidies, transfers, or emergency support for the utilities.
The World Bank’s assessment also highlighted that only one performance indicator was fully met during the reporting period. ECG completed its audited 2025 financial statements. However, these accounts were not published on the utility’s website. This limits the transparency gains expected from the reforms.
This lack of transparency is a concern. Audited financial statements are crucial for accountability in a sector often criticized for opaque accounting. Without publication, a technical milestone is met but public transparency is not achieved. Several operational reforms also remain behind schedule. ECG’s energy accounting system is deployed in only 20% of its districts. This is far below what is needed to monitor power flows and losses properly.
The World Bank’s findings indicate a need for Ghana to urgently accelerate its energy sector reforms. Decision-makers in the Ministry of Finance must streamline funding approvals. Implementing agencies must also improve their execution speed. Failure to do so will likely lead to further ballooning of energy sector arrears. This will undermine overall macroeconomic stability and potentially impact Ghana's credit ratings. Markets will closely watch the government’s response to these warnings.