Ghana Enforces Competitive Bidding for Power Deals to Ensure Transparency and Save Costs

Ghana is set to implement competitive bidding for power contracts in a bid to enhance transparency, promote fiscal discipline, and secure better value for public funds

As part of efforts to reform and restructure Ghana’s power sector and curbing persistent inefficiencies, government has officially laid before Parliament a Legislative Instrument (LI) that will make competitive bidding mandatory for all future power generation contracts. The policy announcement was made by Finance Minister Dr. Cassiel Ato Forson during a high-level session on the Ghana Energy Compact, held as part of the World Bank’s Mission 300 initiative on April 23, 2025.

The Legislative Instrument, if passed, will mark a significant policy shift and a major milestone in Ghana’s journey toward transparent and fiscally sound energy sector governance. Speaking at the event, Dr. Forson underscored the urgency of the reform, noting that competitive procurement is essential to eliminating waste and restoring credibility to the sector.

“We have submitted the LI to Parliament to institutionalize competitive procurement of power plants.  This is not just a reform it’s a necessity. If we are serious about fixing the deeply rooted challenges in our energy sector, we must prioritize transparency, discipline, and value for money.” Dr. Forson stated.

At the heart of the reform is the aim to plug financial leakages that have long plagued the country’s power ecosystem. The Finance Minister revealed that inefficiencies particularly within the state-owned Electricity Company of Ghana (ECG) have contributed to a staggering financial shortfall of nearly US$2 billion.

“ECG alone could halve this deficit if it tackled its internal inefficiencies,” he said, pointing to issues such as billing errors, uncollected revenue, and poor infrastructure maintenance. “We simply cannot continue to pass on these inefficiencies to the Ghanaian consumer in the form of higher tariffs and levies.”He added.

The proposed LI will not only compel competitive tendering for all new generation capacity but will also serve as a deterrent against legacy issues such as non-transparent single-source contracts, excess capacity payments, and procurement-related mismanagement.

This regulatory step is part of a broader energy reform strategy under the Ghana Energy Compact, designed to strengthen fiscal prudence, attract private investment, and ensure energy security. According to Dr. Forson, restoring investor confidence is a top priority.

He also urged Members of Parliament to prioritize and expedite the passage of the LI, highlighting its critical role in unlocking the next phase of reforms. “Time is of the essence,” Dr. Forson emphasized. “We need swift and deliberate legislative backing to bring these changes to life.”

As Ghana continues to battle structural challenges in the energy sector, including ballooning legacy debts and surplus capacity charges, the move to enforce competitive procurement signals a new era of accountability and reform-oriented governance. Stakeholders across the energy value chain, from local utilities to international investors, will be watching closely as Parliament debates and decides the fate of this landmark policy.

Last Updated on April 24, 2025 by samboad