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The International Monetary Fund (IMF) has described Ghana’s renegotiation of legacy arrears owed to Independent Power Producers (IPPs) as a major turning point for the country’s energy sector. This move, the Fund says signals improved financial discipline and renewed confidence in the industry. Right from 2024, the energy sector had been weighed down by over US$2.5 billion in unpaid arrears to IPPs – a burden that strained the sector’s liquidity, disrupted fuel supply and undermined investor confidence in Ghana’s power industry. According to the IMF, the restructuring of the long-standing debt this year represents a crucial “reset” that could help restore balance sheet health across the power value chain if supported by continued reforms in transparency and cost management. In an interview on Channel One TV’s Point of View with Bernard Avle, IMF Resident Representative to Ghana, Dr. Adrian Alter, said government’s engagement with IPPs was a decisive step in resetting the sector’s financial fundamentals. “The renegotiation of the arrears, of the past arrears, which was conducted by the government this summer, is an important milestone,” Dr. Alter said. “I would say that is a reset for the industry.” He noted that the move comes alongside significant operational improvements at the Electricity Company of Ghana (ECG), where revenues have increased “quite substantially compared to last year.” This, he said, has been driven by “better transparency, the effect of tariffs and better collection.” Dr. Alter also highlighted the improved implementation of the cash waterfall mechanism, describing 2025 as a year for payment regularity and transparency within the sector. “The IPPs are now paid more regularly, also the fuel suppliers as well, and the arrears accumulated this year are very limited, if none,” he observed. The IMF representative added that while the sector’s outlook has improved, sustainability will depend on continued fiscal prudence and cost efficiency. He asserted that maintaining payment discipline and further reducing arrears will be needed to safeguarding energy security and ensuring Ghana’s power sector remains financially viable for the long term.
