Every few years, the same headlines return: another wave of blackouts, another emergency bailout, another promise that this time the state will finally fix the grid. Every few years, taxpayers foot the bill while the underlying problem goes untouched. Ghana’s energy sector isn’t broken because of bad engineers or bad luck. It’s broken because the state insists on running a market as if it were a ministry.
Look at the numbers, because they tell the story better than any speech from the podium. In 2025, the government cleared roughly $1.47 billion in energy-sector arrears, a genuine achievement, and still ended the year with over a billion dollars owed to independent power producers. Before that settlement, the sector’s total debt stock had climbed past $3 billion, with projections suggesting it could balloon past $9 billion within a couple of years if nothing structural changed. This isn’t a one-time shock the country absorbed and moved past. It’s a recurring bill that keeps landing on the public’s desk, year after year, regardless of which government is in office.
The mechanics of how we got here are almost embarrassingly simple.
Three Decisions That Guaranteed the Crisis
The Electricity Company of Ghana sits at the center of the national grid as the near-exclusive buyer of wholesale power. Private producers don’t get to sell into an open market where price and demand actually meet. They sign fixed contracts with a single state buyer and hope that buyer can pay. And ECG has a well-documented habit of failing to meet those obligations.” Its own 2024 accounting put system losses at just over 27 percent; the Energy Commission’s independent figures put the number closer to 32 percent, the worst in over two decades. Either way, roughly a third of the electricity ECG buys never turns into revenue it can use to pay the people who generated it.
Then there’s the contract structure itself. To attract private capital into a sector the state wouldn’t fully fund on its own, successive governments signed “take-or-pay” agreements that obligate Ghana to pay for generation capacity whether or not the power is actually consumed. Back in 2018 alone, unused capacity charges under these contracts cost the government $320 million. Multiply that kind of leakage across a decade of similar deals, and it becomes clear why the sector can rack up billions in liabilities even in years when the lights mostly stay on.
Layer political tariff-setting on top of that, and the picture completes itself. Retail electricity prices have repeatedly been kept below the actual cost of generating and delivering power because raising them is politically uncomfortable. That keeps consumers happy in the short run and starves the entire value chain of the capital it needs to fix itself in the long run.
None of this is a mystery. It’s the predictable outcome of a system in which one state entity buys all the power, another state entity moves all the power, and elected officials set the price, leaving almost no room for markets to do what markets do: match supply to demand and punish inefficiency.
What Actually Works Elsewhere
Countries that have gotten out of this trap didn’t do it by nationalizing more. They did it by narrowing the state’s role to enforcing contracts and keeping the playing field fair, while letting private actors handle generation, trading, and increasingly, distribution.
For Ghana, that points to a few concrete shifts rather than another round of emergency financing:
Let large power users buy directly from generators: Mines, factories, and industrial parks don’t need ECG standing in the middle of every transaction. Ghana already has the legal groundwork for a wholesale electricity market on paper; it just hasn’t been fully activated. Finishing that job would let bulk buyers and producers strike deals based on actual demand, not bureaucratic allocation.
Stop signing sovereign guarantees for new generation. The government has already imposed a moratorium on new power purchase agreements, which is a start. Making that a permanent, statutory rule, with no more take-or-pay backstops, would force future projects to prove they’re commercially viable before a single cedi of public money is on the hook.
Open up distribution to real competition. There’s already talk in government about bringing in private management for ECG by 2027. That conversation shouldn’t stop at management contracts. Splitting distribution into regional concessions, each accountable for its own loss rates and collections, creates the kind of direct pressure that state-wide averages and quarterly ministerial statements never will.
The Honest Alternative
None of this means walking away from oversight. A functioning regulator, a transparent tariff process, and enforceable contracts are exactly the kind of state capacity a market economy needs, arguably more of it, not less, since a rules-based system only works if the rules are enforced. What Ghana can’t afford to keep doing is asking the state to be regulator, buyer, distributor, and financier of last resort all at once. That’s not a robust system. It’s a single point of failure with extra steps.
Ghana has already shown, in fits and starts, that it can pay down its debt and stabilize a sector under pressure. The next stage isn’t a bigger bailout. It’s fewer occasions for one to be necessary in the first place, achieved by letting the people who generate, move, and consume power negotiate with each other, rather than routing every decision through a single overstretched buyer.
Sources
- CNBC Africa, Ghana clears $1.47 billion in energy debts, finance ministry says (January 12, 2026)
- Graphic Online, The energy-sector debt
- GBC Ghana Online, Energy sector debts hit GH¢80 billion – Jinapor (March 20, 2025)
- MyJoyOnline, ECG power sale losses hit 32%, highest in over two decades – Energy Commission (May 20, 2025)
- Energy for Growth Hub / IEA Ghana, A Case Study of Ghana’s Power Purchase Agreements
- Lexology, Electricity Regulation in Ghana (on the Wholesale Electricity Market framework)
- U.S. Department of Commerce Trade.gov, Ghana Renewable Energy market intelligence (on the PPA moratorium)
- Graphic Online, ECG private sector participation to start by early 2027 – Finance ministry adviser (May 2026)
Eric Coffie is the founder and Executive Director of the Institute for Liberty and Economic Education (ILEE). For over a decade, he has been a dedicated advocate for free markets, limited government, and Human rights.
Disclaimer: The views expressed in this article are solely those of the author and do not necessarily reflect the official position of ILEE.
