$260m World Bank cash to reduce energy sector losses

Ghana has secured a $260 million agreement with the World Bank to address significant inefficiencies and an estimated $1.2 billion in energy sector losses. The initiative, part of Ghana’s Energy Sector Recovery Programme, includes a $250 million allocation for metering procurement and a $10 million clean cooking grant. Both components fall under the World Bank’s Programme for Results (PforR), emphasizing performance-driven funding.

Under the agreement, the World Bank will oversee the procurement of one million electricity meters through competitive bidding, aimed at reducing Ghana’s metering gap and enhancing revenue collection for the Electricity Company of Ghana (ECG). The clean cooking segment will initially receive 20% advance financing to accelerate progress in sustainable energy solutions.

Key objectives include optimizing energy generation and transmission, enforcing transparency in the Cash Waterfall Mechanism, and significantly reducing revenue losses within the ECG. Integrating the new meters into the existing billing system is expected to improve commercial efficiency and strengthen financial accountability.

During the signing, Finance Minister Dr. Mohammed Amin Adam emphasized the government’s commitment to restructuring the energy sector and boosting financial sustainability. He called on ECG to reduce distribution losses and improve collection rates, noting that the government spent approximately GHS18 billion ($1.2 billion) in 2024 to cover sector shortfalls. “The cash waterfall mechanism must be adhered to without compromise,” Dr. Amin Adam asserted, urging ECG to ensure that collections are appropriately allocated to sustain investor confidence.

Dr. Amin Adam added, “Through this project, we have an opportunity to build a robust energy infrastructure that will underpin a thriving economy. Our goal is not only to stabilize the energy sector but also to improve the quality of life for Ghanaians.”

Deputy Energy Minister Collins Adomako-Mensah pledged adherence to the project’s timeline and targets, stating that a monitoring team had been established to oversee beneficiary agencies’ progress.

Dr. Robert Taliercio O’Brien, World Bank Country Director for Ghana, Liberia, and Sierra Leone, stressed the programme’s importance in improving efficiency and financial health within Ghana’s energy sector, noting that sector shortfalls exceed the average annual funding the Bank provides to Ghana.

Ashish Khanna, World Bank’s Practice Manager for West and Central Africa Energy, highlighted that the financing arrangement would yield better results as funds will be released only upon achieving specific performance metrics. “Rather than disbursing money without results, this approach ensures funds are tied directly to progress,” he explained.

He added that ECG’s annual audits and performance targets, such as reducing collection losses, would be crucial to improving efficiency. Khanna noted, “These measures ensure Ghanaians have accurate metering, while ECG minimizes fiscal losses, ultimately delivering better service.”