The Volta River Authority (VRA) returned to profitability in 2025, but its latest financial performance presents a mixed picture for Ghana’s power sector, with a major foreign exchange gain masking a sharp deterioration in underlying operating earnings.
According to the 2025 State Ownership Report by the State Interests and Governance Authority (SIGA), VRA moved from a GH¢105.75 million net loss in 2024 to a GH¢88.04 million net profit in 2025.
The turnaround improved the Authority’s net profit margin from negative 0.14% to 0.93%.
The headline recovery, however, needs to be viewed against weaker electricity generation, declining operating revenue and a near-collapse in operating profit.
The figures suggest that VRA’s return to the black was driven less by stronger core power-sector performance and more by a dramatic reversal in foreign exchange movements.
Foreign Exchange Gain Drives Profit Recovery
The most significant factor behind the change in VRA’s bottom line was its foreign exchange position.
The Authority recorded a net foreign exchange gain of GH¢236.60 million in 2025, compared with a substantial GH¢694.67 million exchange loss in 2024.
The swing between the two years therefore amounted to more than GH¢931 million and was sufficient to materially alter the final financial outcome.
That distinction is important for assessing the sustainability of the recovery.
“VRA returned to profitability in 2025, reversing a net loss of GH¢105.75 million recorded in 2024 to post a net profit of GH¢88.04 million.”
State Interests and Governance Authority (SIGA)
A foreign exchange gain can provide significant relief to an energy company exposed to currency movements, particularly where financial obligations or transactions are denominated in foreign currency.
However, such gains do not necessarily represent an improvement in the efficiency of electricity generation or the commercial strength of the underlying business.
For VRA, the operating figures reinforce that caution.
Operating profit collapsed by approximately 96.3%, from GH¢814 million in 2024 to only GH¢30 million in 2025. Its operating profit margin consequently fell from 8.54% to 0.33%.
The implication is straightforward: without the substantial improvement in foreign exchange performance, VRA’s financial recovery would have been considerably weaker.
Power Generation And Revenue Come Under Pressure
VRA’s financial performance also coincided with a decline in electricity production.
Electricity generation and supply fell from 13,922 GWh in 2024 to 12,926 GWh in 2025, a reduction of almost 1,000 GWh.
Total revenue consequently edged down from GH¢9.54 billion to GH¢9.48 billion, while operating revenue declined by 3.70%, from GH¢9.29 billion to GH¢8.95 billion.
For a major state-owned generator, the decline matters beyond the balance sheet.
Lower generation can constrain electricity availability, reduce sales volumes and weaken the ability to absorb fixed operating costs across a larger volume of electricity.
The pressure is partly visible in VRA’s cost-recovery ratio. Although the ratio remained above 100% at 114.51%, it declined from 124.23% a year earlier.
That means operating revenue continued to cover operating costs, but the margin of coverage narrowed considerably.
“The cost-recovery ratio remained above 100%, at 114.51%.”
State Interests and Governance Authority (SIGA)
The deterioration in interest coverage is even more striking. VRA’s interest coverage ratio fell from 3.19 times to just 0.16 times.
This indicates that operating earnings in 2025 were barely sufficient to cover interest costs.
It is therefore difficult to interpret the return to profitability as evidence of a broad-based strengthening of VRA’s financial position.
The more accurate reading is that VRA achieved a positive bottom line while its core operating buffer became considerably thinner.
Debt Falls As Financial Leverage Rises
One of the stronger elements of the 2025 results was the reduction in interest-bearing liabilities.
VRA’s interest-bearing liabilities fell by 33.64%, from GH¢3.04 billion to GH¢2.02 billion, representing a reduction of approximately GH¢1.02 billion.
That decline is significant because lower interest-bearing debt can reduce future financing pressure and improve the Authority’s capacity to manage its balance sheet.
However, the improvement was not replicated across total liabilities.
Total debt and liabilities increased slightly from GH¢26.29 billion to GH¢26.66 billion, while trade and other payables increased by 5.92%, from GH¢22.60 billion to GH¢23.93 billion.
Receivables also increased from GH¢23.71 billion to GH¢24.17 billion.
The result is a balance sheet that remains heavily exposed to the wider financial pressures running through Ghana’s electricity value chain.
VRA’s current ratio declined marginally from 1.11 times to 1.07 times, although current assets remained sufficient to cover short-term obligations.
At the same time, the debt-to-assets ratio increased from 0.35 times to 0.42 times.
The equity multiplier also rose from 1.54 times to 1.73 times, pointing to increased financial leverage.
Asset Revaluation Reshapes Balance Sheet
VRA’s asset base also contracted sharply during the year.
Total assets declined by 16.28%, from GH¢75.37 billion to GH¢63.10 billion, largely reflecting a reduction in the value of property, plant and equipment following asset revaluation.
Property, plant and equipment fell from GH¢48.93 billion to GH¢36.25 billion.
Total equity similarly declined by 25.76%, from GH¢49.08 billion to GH¢36.44 billion.
The principal driver was the reduction in the revaluation surplus, which fell from GH¢45.87 billion to GH¢32.75 billion.
These movements are important when interpreting VRA’s financial ratios.
The reduction in assets and equity does not necessarily mean that the Authority physically disposed of a comparable proportion of its productive infrastructure.
Rather, the revaluation adjustment changed the accounting value of its asset base.
Nevertheless, the resulting balance-sheet structure means VRA now carries greater liabilities relative to its recorded assets.
For an electricity generator operating in a capital-intensive sector, that matters.
Hydropower and thermal generation assets require substantial long-term investment, maintenance and rehabilitation.
A financially stronger VRA therefore remains important to Ghana’s broader electricity-security agenda.
Cash Flow Provides A More Positive Signal
Where the 2025 results offer a clearer sign of improvement is cash generated from operations.
Net cash flow from operating activities surged from GH¢31 million in 2024 to GH¢1.58 billion in 2025.
That represents a dramatic improvement in the Authority’s ability to generate cash from its operating activities and helped strengthen short-term debt coverage from 0.13 times to 6.45 times.
The improvement is significant because accounting profitability and cash generation are not the same thing.
In VRA’s case, the strong operating cash flow provides a more tangible indication that cash movements within the business improved during the year.
Cash and cash equivalents nonetheless declined from GH¢1.09 billion to GH¢954 million.
Net cash used for investing activities also fell, from GH¢1.47 billion to GH¢1.34 billion, while financing activities shifted from a net inflow of GH¢1.63 billion in 2024 to a net outflow of GH¢369 million in 2025.
The shift suggests a year in which VRA generated substantially more operating cash while simultaneously reducing reliance on financing inflows.
VRA’s Recovery Must Now Be Tested By Operations
The central challenge for VRA is whether the 2025 return to profitability can be converted into a durable improvement in the underlying power business.
The Authority remains central to Ghana’s electricity system, operating major hydro and thermal generation assets and contributing to electricity supply within Ghana and the wider West African market.
Its financial condition therefore has implications beyond corporate performance.
A generator whose operating profit falls from GH¢814 million to GH¢30 million cannot rely indefinitely on favourable currency movements to sustain profitability.
Foreign exchange gains can reverse, while electricity-generation assets continue to require investment, maintenance and fuel or other operating inputs.
The more meaningful test will therefore be whether VRA can rebuild operating margins while maintaining reliable generation and strengthening cash generation.
The 2025 results provide some basis for optimism, particularly the substantial improvement in operating cash flow and the reduction in interest-bearing liabilities. But they also expose vulnerabilities that cannot be ignored.
VRA generated less electricity, earned lower operating revenue and recorded dramatically weaker operating profit, even as the final accounts moved into positive territory.
The strategic priority should therefore be to treat the GH¢88.04 million profit as a recovery point rather than a conclusion.
For Ghana’s power sector, the stronger outcome would be a VRA whose profitability is increasingly generated by reliable electricity production, stronger commercial performance, disciplined costs and sustainable cash flows, not predominantly by movements in foreign exchange.
The 2025 results show that VRA has regained positive territory. The next challenge is proving that the improvement can survive without favourable currency movements.
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