Ghana pays off billions in debt linked to World Bank-backed power sector reforms
•
Article summary
Ghana spends billions in 2025 to settle energy debts linked to World Bank-backed deals with independent power producers, as civil society warns of costs of failed public-private partnerships.
Ghana spent $1.47 billion in 2025 to “rescue” its energy sector, primarily to settle debts with independent power producers (IPPs). The country had been one of the first in Sub-Saharan Africa to liberalise its energy sector, introducing IPPs under World Bank–promoted reforms (see Observer Summer 2025) designed to attract private investment, with the state utility purchasing power from private plants. Yet securing these investments required extensive public guarantees, including “take-or-pay” contracts that obliged the government to buy a minimum amount of power even when electricity went unused (see Briefing, Gambling with planet’s future?). As demand fell below projections, these agreements became a major fiscal burden, pushing annual revenue shortfalls above $2 billion as of May 2025.
In addition, in 2015 the World Bank issued a $500 million guarantee to prevent Ghana National Petroleum Corporation (GNPC) from defaulting on Sankofa gas contracts with private energy companies Eni and Vitol (see Observer Spring 2020). While focused on gas supply rather than power generation, the project reflects the same broader model of using public guarantees to de-risk private energy investment. After payment delays from 2019, the guarantee was fully drawn by early 2025, with Ghana repaying $597 million to the Bank to restore the facility.
“The recent payment by the Ghanaian government should not be celebrated as financial prudence, rather criticized as fiscal discipline by global finance,” noted Riska Koopman of the African Forum and Network on Debt and Development (AFRODAD). “It may also set a dangerous precedent of the costs of failed public-private partnerships and structural arrangements being pushed onto citizens by way of reduced spending on essential services such as healthcare and education. This project again illustrates the failures of MDBs like the World Bank financing fossil fuels, further entrapping African countries in the extractives debt trap, without any recourse.”
