Government Clears $1.47bn Energy Sector Debt, Restores World Bank Guarantee

The Government of Ghana says it has brought the country’s energy sector back from the brink, announcing the full clearance of legacy debts that once threatened national financial stability and international credibility.

According to the Ministry of Finance, a total of US$1.47 billion was paid in 2025 to stabilise the energy sector, clear inherited arrears, and restore confidence among local and international partners.

When President John Dramani Mahama assumed office in January 2025, the energy sector was burdened by years of unpaid gas bills, particularly for supplies from the Offshore Cape Three Points (OCTP) field. These payment failures had exhausted the World Bank Partial Risk Guarantee (PRG), a US$500 million facility designed to backstop payments to energy sector partners.

The PRG, established in 2015, was instrumental in attracting nearly US$8 billion in private investment through the Sankofa Gas Project. Its depletion, the Ministry notes, severely undermined Ghana’s credibility with international financiers.

By December 31, 2025, government had fully repaid US$597.15 million, including interest drawn under the World Bank guarantee, effectively restoring the facility in full.

In addition to restoring the PRG, government settled all outstanding gas invoices owed to ENI and Vitol, the Sankofa project partners, between January and December 2025. These payments amounted to approximately US$480 million, bringing Ghana fully up to date on its obligations for gas used in electricity generation.

The Ministry of Finance says budgetary provisions have now been secured to ensure timely payments going forward, reducing the risk of future arrears.

Government has also reached agreements with Tullow Oil and Jubilee Field partners on a comprehensive payment roadmap to guarantee full settlement for all gas off-taken. Officials say this forms part of a broader strategy to support reliable nationwide power generation while driving industrial growth.

These engagements have already led to increased domestic gas production, aligned with government’s stated objective of expanding local supply and cutting reliance on costly liquid fuels.

As part of a wider energy sector reset, the Mahama administration has renegotiated all Independent Power Producer (IPP) agreements, securing improved value for money for the state.

In 2025 alone, government paid approximately US$393 million in legacy IPP debts. At the same time, the disciplined application of the Cash Waterfall Mechanism has allowed the state to remain largely current on IPP invoices throughout the year.

Altogether, the Ministry of Finance reports that US$1.470 billion was spent in the 2025 fiscal year to rescue and stabilise the energy sector.

Government insists that the measures mark a decisive break from the past.

“The era of uncontrolled energy sector debt accumulation is over,” the Ministry said, assuring the public, industry stakeholders, and international partners of its commitment to sustained fiscal discipline and improved payment performance across the sector.

The announcement positions the energy sector as a cornerstone of Ghana’s broader economic recovery and long-term growth strategy.