On Wednesday, September 4, Parliament approved the contentious $250 million loan agreement for the Ghana Energy Sector Recovery Programme (ESRP) during an extraordinary session.
The approval followed the adoption of the Finance Committee’s report on the agreement between the Government of Ghana, represented by the Ministry of Finance, and the International Development Association (IDA) of the World Bank Group.
This agreement includes a $250 million loan and a $90 million consultancy fee as part of the ESRP.
Earlier, on July 30, 2024, Parliament had rejected the loan agreement due to concerns about the large consultancy fee, as highlighted by MP Alhaji Muhammad Mubarak of Asawase.
On September 3, during the extraordinary meeting, the Minority raised similar concerns about the $90 million consultancy fee and requested clarification from the Majority to reconsider the earlier decision.
By the second day of the meeting, Parliament accepted the Finance Committee’s revised report and detailed explanation, leading to the loan’s approval.
The loan aims to fund the ESRP, which seeks to reduce electricity purchase costs and improve revenue collection for distribution utilities.
On June 12, 2024, the World Bank had approved a $250 million credit from the 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), pending parliamentary approval.
The World Bank report notes that high electricity distribution losses in Ghana, caused by low collection rates and tariffs below cost recovery, are negatively affecting the performance of energy utilities. The Government of Ghana is said to transfer about 2% of GDP annually to cover the sector’s financial shortfalls.
