ACCRA— Ghana’s energy sector is headed toward a costly reckoning in 2025 as over $1 billion is projected to be spent on liquid fuels to power thermal plants—an expenditure the country’s Energy Minister, John Jinapor, has described as “fiscally unsustainable.”
The warning sighted by Accra Street Journal came as Jinapor inaugurated technical and steering committees for the long-awaited Gas Processing Plant 2 (GPP2) in Accra. Ghana’s deepening reliance on diesel, light crude, and heavy fuel oil has left the nation increasingly vulnerable to external price shocks, foreign exchange volatility, and structural inefficiencies in the electricity value chain.
“Liquid fuel isn’t even priced into our tariffs,” Jinapor said, “yet we’re forced to rely on it due to a daily gas shortfall of 100 million standard cubic feet.”
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With electricity demand growing at a clip of 300 megawatts per year, Ghana faces a widening supply-demand gap. Compounded by underinvestment in domestic gas infrastructure, the government has been forced into costly short-term fixes—importing fuel that drains reserves and undermines long-term energy security.
A Strategic Pivot: Can GPP2 Deliver?
To stem the crisis, the government is fast-tracking GPP2, a major infrastructure project projected to save Ghana up to $500 million annually in fuel costs. Located in proximity to the original Atuabo Gas Processing Plant, the new facility is designed to enhance domestic gas processing, reduce flaring, and support clean energy goals.
Jinapor positioned the project as an economic and environmental imperative, claiming it would “pay for itself within two years.” He also emphasized its broader benefits, including job creation, increased LNG and LPG availability, and a boost to energy sector liquidity—particularly as Independent Power Producers (IPPs) continue to battle delayed government payments.
Minister for Finance Dr. Cassiel Ato Forson, chairing the GPP2 Steering Committee, echoed Jinapor’s urgency and criticized past inaction:
“I’m surprised the previous administration didn’t move on this. Without Atuabo, the crisis would be far worse.”
Transparency and Cost Questions Shadow Ambitions
Despite government optimism, civil society groups are raising red flags over the project’s opacity. The Africa Centre for Energy Policy (ACEP), in its recent 2025 Budget Insights report, highlighted the absence of GPP2 in the national budget, questioning how the project’s financing will be structured.
ACEP also warned about potential cost inflation, referencing a previous GPP2 estimate of $800 million—more than double the international benchmark for similar facilities.
“We lost nearly $290 million to gas flaring in 2023,” the report stated. “Projects like GPP2 must avoid inflated costs and deliver real returns for the Ghanaian people.”
The think tank called for competitive procurement, public disclosure of funding sources, and independent oversight to ensure GPP2 does not become another expensive state-led gamble.
Outlook: Necessary Reform or Costly Patch?
As Ghana’s energy ambitions collide with fiscal limitations and transparency concerns, the success of GPP2 will likely serve as a litmus test for broader reforms in energy policy. While the government promotes it as a cornerstone of the green transition and energy independence, investors and watchdogs are looking for governance, not just gas.
Last Updated on December 6, 2025 by Samuel Kwame Boadu
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Samuel Kwame Boadu is a Ghanaian media entrepreneur and storyteller with a passion for amplifying urban voices and uncovering everyday truths. He is the Editor-in-Chief and Founder of Accra Street Journal, a dynamic digital platform dedicated to capturing the pulse of Ghana’s capital—its people, culture, challenges, business, sports and innovations.
