The Electricity Company of Ghana (ECG) accumulated arrears of about US$3.5 billion in 2025, highlighting the scale of financial pressure facing Ghana’s power sector, the International Monetary Fund (IMF) has said.

In its latest Selected Issues Paper, the IMF said ECG’s unpaid obligations reached a peak of US$3.5 billion in mid-2025 before declining to about US$2.8 billion by the end of the year as government-backed reforms began to ease pressures.

The Fund said ECG’s financial challenges were linked to weak revenue collection, high distribution losses and a gap between the cost of electricity supply and the tariffs paid by consumers.

The IMF noted that ECG collects about 86 percent of billed electricity revenue, but weaknesses in the payment system have affected the company’s ability to settle obligations owed to power producers, fuel suppliers and other sector players.

The resulting payment delays have contributed to the accumulation of arrears across the energy value chain, forcing government to provide financial support to prevent further disruption.

The IMF said the sector received about US$2 billion in government support in 2025, including payments to address obligations owed to gas suppliers and independent power producers.

Major challenge

The Fund identified ECG’s distribution losses as one of the key structural problems affecting Ghana’s electricity sector.

Technical and commercial losses remained at 27.1 percent in 2024, while losses in areas served by the Northern Electricity Distribution Company (NEDCo) reached 31.3 percent.

The IMF warned that these inefficiencies weaken ECG’s financial position and increase the likelihood of power supply challenges, affecting households and businesses.

“These are not just accounting problems,” the Fund said, noting that financial weaknesses in the sector translate into disruptions that affect economic activity.

Private sector reforms

The IMF has encouraged Ghana to improve ECG’s operational efficiency through stronger revenue collection, better loss management and increased private sector participation.

The Fund supported plans to introduce private sector operators into parts of ECG’s distribution operations, describing the approach as “private sector participation” rather than privatisation.

It also urged authorities to strengthen the Cash Waterfall Mechanism, ensure regular tariff adjustments and publish audited accounts of energy sector companies.

The IMF said a financially stable ECG would be critical to reducing government bailouts and creating a reliable electricity supply system to support Ghana’s economic growth.

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