Ghana has signed a significant US$260 million deal with the World Bank aimed at addressing the US$1.2 billion losses and various inefficiencies plaguing its energy sector.

This agreement, part of the Energy Sector Recovery Programme, includes a US$250 million credit for a metering procurement package and a US$10 million clean cooking grant component, in line with the Bank’s Programme for Results (PforR) initiative.

As part of the agreement, the World Bank will facilitate the procurement of one million meters through competitive bidding, with the clean cooking component receiving an advance of 20 percent of the financing requirement initially. The initiative is tied to specific targets, such as optimizing energy generation transmission, ensuring transparency in the Cash Waterfall Mechanism, and significantly reducing revenue collection losses for the Electricity Company of Ghana (ECG).

The deal is expected to drastically decrease the country's metering gap and integrate new meters into the billing system, thereby improving commercial loss. Speaking at the signing event, Dr. Mohammed Amin Adam, Finance Minister, emphasized the government’s commitment to enhancing efficiency in the energy sector and increasing financial viability by adopting innovative approaches. He urged the ECG to eliminate high electricity distribution losses and improve collection rates, which have caused the government to spend approximately GHS18 billion (US$1.2 billion) in financing energy sector shortfalls in 2024 alone.

“The cash waterfall mechanism must be adhered to… and we won’t compromise,” he stated, directing the ECG to ensure that all collections are funneled back into the system and redistributed to beneficiaries to build confidence in the investor community.

Mr. Asjish Khanna, Protective Manager for West and Central Africa Energy at the World Bank, noted that the financing arrangement would yield better results due to its performance-based structure. “This is better because rather than releasing money without achieving the results, this format of financing ensures that money is disbursed only after the achievement of results,” he explained.

He further added, “We are asking ECG’s financial accounts audited to be disclosed annually at a particular time every year; once they disclose it in year one, a certain amount of money would be released.” Additionally, he emphasized that since everyone acknowledges that ECG's collection and losses are not optimal, there is a target for reducing those losses, and funds will be released based on the level of reduction achieved each year.

Mr. Khanna concluded that these measures are designed to ensure Ghanaians receive accurate meter readings while the ECG reduces its fiscal drain, stating, “Efficiency in ECG means better service to people.”