The World Bank has approved a substantial $260 million financial package to support Ghana’s efforts in reforming its energy sector and enhancing access to clean cooking solutions. This package comprises a $250 million credit from the International Development Association (IDA) and a $10 million grant from the Energy Sector Management Assistance Program.
The funding will back a 4-year initiative known as the Ghana Energy Sector Recovery Program for Results (PforR), which aligns with the nation’s Energy Sector Recovery Programme (ESRP). The primary objectives are to bolster the financial health of electricity distribution and to expand access to clean cooking technologies.
Ghana faces significant challenges in its energy sector, including high electricity distribution losses due to low collection rates and tariffs that do not cover costs. These issues have led to operational inefficiencies and substantial financial deficits, with the government covering shortfalls amounting to about 2 percent of the country’s GDP annually.
Robert Taliercio, the World Bank Country Director for Ghana, Liberia, and Sierra Leone, emphasized the World Bank’s commitment: “Through this important results-based financing, the World Bank is committed to supporting the recovery of Ghana’s energy sector and its financial sustainability. The operation aims to strengthen revenue collection and improve the quality of energy supply, including through investments in prepaid metering and in the commercial and meter management systems of distribution utilities.”
The PforR initiative will not only enhance financial sustainability through better revenue collection but also improve the quality of energy supply. Investments will be made in prepaid metering systems and the enhancement of commercial and meter management systems for distribution utilities.
This program complements ongoing regulatory and policy reforms supported by the World Bank’s Development Policy Finance series, including the IDA-supported First Resilient Recovery Development Policy Financing operation approved in January 2024, and the ongoing IMF Extended Credit Facility Program for Ghana.
Dhruva Sahai, Program Leader for Infrastructure, highlighted the operational focus: “The PforR aims to reduce the cost of electricity service provision by improving the economic dispatch of generation and by strengthening the commercial and operational performance of distribution utilities.”
In addition to electricity sector improvements, the program has a significant clean cooking component. It aims to increase access to Liquified Petroleum Gas (LPG) for households, schools, and businesses. The initiative will subsidize the cost of stoves and accessories, excluding cylinders, for first-time users, commercial caterers, and secondary schools. These efforts are expected to enhance women’s access to clean cooking solutions, reduce health risks from smoke exposure, and improve economic opportunities for women.
The World Bank’s comprehensive support aims to not only address immediate financial and operational challenges in Ghana’s energy sector but also foster long-term sustainability and improved quality of life for its citizens.
