Parliament Okays $250m World Bank Loan

Ghana’s Parliament on Wednesday September 4, 2024 has approved a $250 million loan agreement from the World Bank to support the Ghana Energy Sector Recovery Programme.

The facility, which was previously disapproved by the House before it adjourned sine die on July 30, was a key reason for the recall of Parliament for a two-day emergency sitting.

The loan is intended to bolster efforts in stabilizing and revitalizing Ghana’s energy sector, addressing longstanding financial challenges, and ensuring a reliable supply of electricity to both households and businesses across the country.

During the proceedings, the Minority initially expressed strong reservations, particularly over a $90 million consultancy fee embedded within the loan agreement.

They argued that the fee was exorbitant and required further scrutiny before approval could be granted.

Despite these objections, the loan facility was ultimately approved, with the Majority emphasising the urgent need for funds to resolve critical issues in the energy sector.

They highlighted that the recovery programme is essential for sustaining the energy supply, reducing debt, and promoting economic growth.

The World Bank on June 12th, 2024 approved the $250 million credit from the International Development Association (IDA) and a $10 million grant from the Energy Sector Management Assistance Program for a 4-year Ghana Energy Sector Recovery Program for Results (PforR) subject to parliamentary approval.

The Bank in its report says, electricity distribution losses are high in Ghana due to a low collection rate and below-cost recovery tariffs, undermining the operational and financial performance of energy utilities in the country as the bank has discovered that, the Government of Ghana transfers about 2% of GDP annually to cover the energy sector’s financial shortfall.