By Lord Fiifi Quayle

Within his first year back in office, President John Dramani Mahama has moved swiftly to confront one of Ghana’s most destabilizing economic liabilities: a debt-ridden energy sector that had eroded investor confidence and strained public finances.

By the close of the 2025 fiscal year, the government had paid roughly $1.47 billion to clear inherited arrears across the power and gas value chain, according to figures released by the Ministry of Finance. The payments, officials say, were aimed at restoring financial discipline to a sector long plagued by delayed settlements, mounting interest costs and weakened credibility with international partners.

When Mr. Mahama assumed office in January 2025, the energy sector was under acute pressure. Years of nonpayment for gas supplied from the Offshore Cape Three Points (OCTP) field, home to the Sankofa Gas Project had triggered repeated calls on a $500 million World Bank Partial Risk Guarantee. That guarantee, intended as a backstop rather than a routine source of financing, had been fully exhausted under the previous administration.

The guarantee, established in 2015 during an earlier Mahama-led government, was instrumental in unlocking nearly $8 billion in private investment for the Sankofa project, led by the Italian energy firm ENI and its partner Vitol. Its depletion was widely viewed in policy circles as a warning sign not only of fiscal stress, but of weakened governance in a strategically vital sector.

By December 31, 2025, the government had repaid $597.15 million, including interest, to fully restore the World Bank guarantee. Officials described the move as essential to repairing Ghana’s standing with multilateral lenders and foreign investors, many of whom had grown wary of the country’s ability to honor long-term payment commitments.

At the same time, the government settled approximately $480 million in outstanding gas invoices owed to ENI and Vitol for electricity generation during the year, bringing Ghana fully up to date on its obligations to the Sankofa partners. Finance ministry officials say budgetary provisions have now been secured to ensure timely payments going forward.

The administration has also turned its attention to other upstream producers. Negotiations with Tullow Oil and partners in the Jubilee Field have produced what the government describes as a comprehensive roadmap for settling gas offtake payments, an effort officials link to broader plans to support reliable nationwide electricity supply and expand industrial output.

Those engagements, the Energy Ministry says, are already yielding results. Gas production has increased, guided by a strategy to scale up domestic supply and reduce reliance on costlier liquid fuels, a shift long advocated by energy economists concerned about Ghana’s exposure to volatile global oil prices.

A significant portion of the 2025 payments went toward clearing legacy debts owed to Independent Power Producers, whose unpaid invoices have historically contributed to balance-sheet stress across the sector. The government paid about $393 million to IPPs during the year, including major settlements with Karpowership Ghana, Sunon Asogli, Cenpower, Amandi and other operators.

In parallel, officials say they have renegotiated all existing IPP agreements to improve value for money, a politically sensitive process in a sector where take-or-pay contracts have often drawn public criticism.

Beyond clearing arrears, the government has emphasized stricter enforcement of the Cash Waterfall Mechanism, a payment system designed to ensure that revenues collected across the power sector are distributed transparently and predictably. According to the Ministry of Energy, Ghana has remained largely current on IPP invoices for 2025 a marked departure from past patterns.

In a statement accompanying the figures, the government sought to strike a forward-looking tone. “The era of uncontrolled energy sector debt accumulation is over,” it said, assuring citizens, industry players and international partners that reforms now underway are intended to be durable.

Whether the reset will hold depends on continued fiscal restraint and sustained growth in electricity demand. But for now, analysts say, the aggressive cleanup of energy sector liabilities has removed a major overhang from Ghana’s economic outlook and signaled a renewed effort to restore trust in one of the country’s most critical industries.

GHANA IS WORKING AGAIN