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Ghana Approves $250M Loan for Energy Sector Recovery and LPG Access

energy
  • Ghana’s Parliament approved a $250 million loan for the Energy Sector Recovery Programme to cut electricity costs and boost LPG access.
  • The loan, sourced from the World Bank’s International Development Association, will support the Electricity Company of Ghana and advance the National LPG Promotion Programme.

Parliament has approved a $250 million loan agreement to fund Ghana’s Energy Sector Recovery Programme (ESRP). The loan, secured from the International Development Association of the World Bank Group, aims to reduce electricity purchase costs, boost revenue collection for distribution utilities, and enhance the Electricity Company of Ghana (ECG) ‘s financial management.

It will also support the National Liquefied Petroleum Gas Promotion Programme (LPGPP), which aims to achieve a 50% LPG access goal by 2030.

The agreement, initially rejected on July 30, 2024, due to concerns that $90 million was allocated for consultancy, was revisited after further scrutiny. Speaker of Parliament Alban Sumana Kingsford Bagbin referred the matter to the Finance Committee for additional review.

During today’s session, the Finance Ministry clarified that only $10 million of the loan is designated for consultancy, with the remaining funds allocated differently. The project is divided into two components: Programme for Results (P for R) with $150 million and Investment Project Financing (IPF) with $100 million.

The P for R component reduces power system costs, improves ECG’s operational performance, and enhances financial management systems. At the same time, the IPF aims to reduce distribution losses and improve operational performance.

The P for R programme includes four key areas: reducing power system costs, improving ECG’s performance, enhancing financial management, and increasing access to clean cooking solutions. The programme will support phase 1 of the National LPGPP by providing subsidised LPG cook-stove packs to 450,000 nationwide beneficiaries.

The Finance Committee’s report highlighted the government’s ongoing efforts to expand electricity access through grid extensions, mini-grid installations, and off-grid solar solutions. Previous projects, including the Ghana Energy Development and Access Projects I and II and the Ghana Energy Sector Transformation Initiative Project, were noted for their role in increasing electricity access and strengthening the energy sector.

Deputy Majority Whip Habib Iddrisu moved the motion for loan approval, which Isaac Adongo, Ranking Member of the Finance Committee, seconded. Adongo confirmed that the Finance Ministry had clarified the misunderstanding regarding the $90 million allocation, leading to the committee’s support for the motion.

The loan’s approval marks a significant step towards enhancing Ghana’s energy sector and advancing the country’s LPG access goals.