A stronger cedi won’t fix Ghana’s electricity prices without sector-wide reform, warns new CATF analysis

ACCRA, Ghana – New analysis from Clean Air Task Force (CATF) finds that Ghana’s recent currency appreciation – while offering temporary fiscal relief – is unlikely to significantly reduce electricity prices for Ghanaians without structural reforms in the power sector. While a stronger cedi may ease import costs and foreign-denominated power contracts, electricity prices remain elevated due to structural inefficacies, legacy debt, and non-transparent tariff-setting practices.  

“Electricity prices in Ghana don’t just reflect market forces – they reflect a system that has been neglected and distorted for too long,” said Michael Adu Okyere, Regional Policy Manager at CATF. “Without comprehensive reform, the sector will remain trapped in a cycle of debt, inefficiency, and fiscal strain.”  

Ghana’s Public Utilities Regulatory Commission (PURC) is mandated to review tariffs quarterly, with the next review scheduled for September. These reviews factor in inflation, fuel prices, and exchange rate dynamics. But CATF’s analysis shows that short-term currency gains are unlikely to bring sustained relief to households or businesses for myriad reasons, including:  

• Persistent financial inefficiencies: Ghana’s generation mix includes significant underutilized capacity, with long-term take-or-pay contracts that drive up costs regardless of currency strength. By early 2025, the government owed IPPs over US$1.73 billion in legacy arrears, despite earlier interventions under the Energy Sector Recovery Programme (ESRP). 

• Growing power sector debt: The sector’s combined debt now exceeds GH¢80 billion (approximately $5.8 billion USD), contributing to sector-wide instability. The 2025 budget revealed a projected US$2.23 billion financing gap – reflecting the difference between the sector’s total funding needs (across generation, transmission, distribution, and debt servicing) and the revenue it is expected to generate. 

• Lack of transparency: Tariff-setting processes remain opaque, and revenue shortfalls continue to plague utilities despite past tariff increases.  

While the IMF-supported program and Ghana’s domestic debt exchange may help stabilize macroeconomic conditions, power sector inefficiencies will continue to undermine affordable, clean energy access unless directly addressed. CATF’s recommendations include:  

• Tariff reform and transparency to ensure prices are based on a clear, consistent methodology that reflects service improvements and builds public trust.  

• Implementation of the Cash Waterfall Mechanism and phaseout of distortionary subsidies to stabilize cash flows, improve sector bankability, and reallocate funds toward more equitable support mechanisms.  

• Operational efficiency and innovative financing through investments in smart metering, grid upgrades, and performance-based utility management – alongside expanded use of non-fiscal tools like securitized bonds to attract private capital. 

The full policy brief is available here.