Government clears $1.47bn legacy energy sector debts within first year of Mahama administration

The Government of Ghana has cleared legacy energy sector debts amounting to approximately US$1.47 billion as at December 31, 2025, the Ministry of Finance has announced.

According to the Ministry, the payments executed within the first year of the Mahama Administration have significantly eased long-standing financial pressures that previously pushed the energy sector to the brink of collapse.

The debt clearance forms part of a broader strategy to restore confidence, stabilize power generation, and rebuild the credibility of Ghana’s energy value chain.

World Bank guarantee fully restored

A major component of the intervention was the full repayment of the World Bank Partial Risk Guarantee (PRG), which had been drawn down under the previous administration due to persistent non-payment obligations.

In a statement issued on Monday, January 12, the Ministry of Finance disclosed that the government repaid US$597.15 million, inclusive of accrued interest, thereby fully restoring the PRG facility.

The restoration of the guarantee is expected to improve Ghana’s standing with international financiers and strengthen investor confidence in the energy sector.

Gas suppliers fully paid

The Ministry further revealed that all outstanding gas invoices owed to ENI and Vitol, partners in the Sankofa Gas Project, have been fully settled.

These payments amounted to approximately US$480 million as at the end of 2025, ensuring that Ghana is fully up to date on its obligations for gas supplied for electricity generation.

Officials say this settlement eliminates supply risks and reinforces the country’s energy security.

Payments to IPPs and future safeguards

Beyond gas suppliers, the government also made substantial payments toward legacy debts owed to Independent Power Producers (IPPs).

According to the statement, about US$393 million was paid to IPPs in 2025 alone, reducing accumulated arrears that had strained relations with private power producers and threatened generation reliability.

Additionally, the Ministry announced that new strategic agreements have been reached with Tullow Oil and Jubilee Field partners, aimed at establishing a sustainable roadmap for future gas off-take payments.

These agreements are designed to prevent the recurrence of arrears and ensure predictability in the sector.

Commitment to fiscal discipline

The Ministry of Finance emphasized that prudent fiscal management, coupled with adequate budgetary provisions, has been instituted to sustain timely payments across the energy value chain going forward.

It noted that clearing the legacy debts represents a critical step in restoring operational stability, improving service delivery, and supporting economic growth.

“The government remains committed to ensuring that the energy sector is financially sound, commercially viable, and capable of supporting Ghana’s development agenda,” the statement said.

Breakdown of 2025 energy sector payments

The US$1.47 billion expenditure in the 2025 fiscal year covered key components of the energy sector, including:

• Sankofa Gas Project partners (ENI and Vitol): Approximately US$480 million paid to clear outstanding gas supply invoices
• World Bank Partial Risk Guarantee: US$597.15 million repaid, fully restoring the facility
• Independent Power Producers (IPPs): About US$393 million paid toward legacy debts
• Strategic gas off-take arrangements: New agreements reached with Tullow Oil and Jubilee partners to secure future supply

The Ministry concluded that these interventions mark a decisive turnaround for the energy sector and signal government’s resolve to avoid a return to unsustainable debt accumulation.

Read the full statement by the finance ministry below:

Government clears $1.47bn legacy energy sector debts within first year of Mahama administration

Source: Finance Ministry, Ghana

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