Ghana’s gas debt provides cautionary tale as World Bank reconsiders support for upstream gas projects
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Article summary
- After following World Bank reform model, government faces crippling debts and high energy costs
- ActionAid Ghana calls for cancellation of fossil fuel debt, after Bank committed $1.2 billion in troubled flagship Sankofa offshore gas project
An April report from ActionAid Ghana and Netherlands-based civil society organisation SOMO provided a withering assessment of Ghana’s derailed development progress, following the discovery of offshore oil and gas in 2007 amid widespread World Bank support for the country’s gas development.
The report comes as the World Bank board is reportedly reconsidering its 2017 decision to phase out investments in ‘upstream’ gas (see Observer Summer 2025, Spring 2018).
The report, Gaslighting Ghana: How World Bank-backed projects drive crippling energy debt and fossil fuel dependency in Ghana, noted, “By 2022, Ghana found itself unable to meet debt repayment obligations for the third time since it became a fossil fuel producing country,” despite the IMF initially hailing oil and gas revenues as key to the country’s economic development, and the World Bank investing heavily in the sector.
It noted that the development of Ghana’s offshore gas reserves and the concurrent development of new gas power plants owned by independent operators – both supported by the World Bank Group – have meant that, “Ghana currently has an expensive, unreliable power sector that requires hundreds of millions of public subsidies each year to stay afloat, including payments to meet controversial obligations with foreign companies.”
The World Bank Group backed Ghana’s flagship Sankofa offshore gas field with $1.2 billion in financing and guarantees in 2015, and has committed nearly $2 billion to Ghana’s oil and gas sector in recent decades (see Observer Spring 2020). Across the board, Ghana’s gas development has been structured via public-private partnerships with ‘take or pay’ clauses that guarantee regular payments to foreign investors whether energy is needed or not, collectively “draining over $1 billion of Ghana’s public funds annually,” per the Gaslighting Ghana report.
Ghana’s citizens foot the bill for World Bank’s over-optimism, as foreign investors cash in
According to a 2024 World Bank Programme for Results (P4R) project document, “Ghana was one of the first countries in Sub-Saharan Africa to unbundle its electricity sector and host independent power producers (IPPs)” – following a World Bank-led reform model that has been increasing criticised by unions and civil society organisations (see Briefing, Gambling with planet’s future?).
This private sector-led approach remains widely promoted by the Bank, including through policy targets under the 21st replenishment of the International Development Association (IDA) – its low-income country arm – aimed at making energy utilities more ‘fiscally sustainable’, and through country energy compacts linked to its new Mission 300 energy access initiative in Sub-Saharan Africa (see Observer Summer 2025; Dispatch Springs 2025).
Ghana’s citizens have carried the burden of growing debts from its gas development. At the 2024 Spring Meetings, Ghana’s then-energy minister Dr Mohamed Amin Adam said the country has agreed to raise tariffs by 70 per cent, as part of the latest wave of World Bank-based reforms, linked to a $260 million P4R financing agreement signed in May 2024. This adjustment reflects – in part – the increasingly expensive cost of electricity in Ghana, with IPPs providing electricity at rates significantly higher than in regional neighbour Nigeria, according to the Gaslighting Ghana report.
John Nkaw, ActionAid Ghana’s country director rejected the Bank’s policy approach in the Gaslighting Ghana report’s foreword, noting, “Ghana’s energy future must be climate-resilient, democratically governed, and free from exploitative fossil fuel arrangements. We call for an end to new coal, oil, and gas projects, the cancellation of fossil fuel debt, and a bold shift towards public investment in renewable energy systems that meet the needs of people.”
