The International Monetary Fund (IMF) has mentioned that Ghana’s annual energy sector shortfall is estimated to reach US$2.2 billion by December 2025.

According to the Fund this reflects the Electricity Company of Ghana’s (ECG’s) large commercial and technical losses and slow electricity tariff adjustment in the face of exchange rate fluctuations and higher power generation costs.

The concern by most analysts is that despite the many taxes paid by petroleum consumers, the country’s energy sector debt will not come down anytime soon.

The 2025 Budget has allocated GH¢27.1 billion (around US$1.7 billion) to cover the shortfall, assuming that policy actions will be taken to help reduce it. These include resuming quarterly tariff adjustments and accelerating implementation of the Energy Sector Recovery Programme measures—including conducting a multi-year tariff assessment (MYTO) to reflect changes in the costs of energy production (end-September 2025 SB), enhancing revenue collection, and limiting arrears accumulation.

The Fund said some progress has recently been made in addressing the energy sector’s challenges.

These included that the Public Utilities Regulatory Commission (PURC) announcement of a 14.75% increase in electricity tariffs in April 2025, after having maintained tariffs unchanged in December 2024 and March 2025, and the Cabinet approval of opening a power distribution to private sector participation (end-September 2025.

The publication of 2023 Quarter 4 and 2024 ECG Revenue/Collection Accounts Validation Reports (end-January 2025) was completed with a delay, because it covered a period longer than envisaged.

According to the IMF, the 2024 report highlighted that the Cash Waterfall Mechanism (CWM)—a framework to ensure the distribution of ECG’s revenues to stakeholders—was not implemented according to its guidelines, with significant deviations between ECG’s validated and declared collections (GHS5.3 billion) and between CWM allocations and actual payments (GHS3.9 billion).

Despite this improvement, the Fund some Independent Power Producers received less than expected, as fuel payments and the addition of an IPP diluted CWM distributions.