Government’s plan to invest US$500 million in electricity transmission modernisation and deploy two million prepaid meters is an acknowledgement that Ghana’s energy difficulties cannot be resolved by building additional power plants alone.
The measures, announced in the 2027 Budget, target weaknesses further down the electricity value chain, where network losses, inadequate infrastructure and poor revenue collection continue to undermine the financial performance of the sector.
Presenting the budget to Parliament on November 12, 2026, Finance Minister Dr Cassiel Ato Forson said the transmission investment would be implemented between 2027 and 2030.
The programme is expected to strengthen the North-South transmission network, connect new generation facilities to demand centres, support electricity trade within the sub-region and provide reliable connections to strategic industrial enclaves.
Government also plans to deploy two million prepaid meters to reduce distribution losses, while introducing performance-based private-sector participation in electricity distribution by the end of 2027.
The commitments are important because Ghana’s power sector has struggled with a persistent mismatch between the cost of supplying electricity and the revenue collected from consumers.
Expanding generation without improving the ability to transmit, distribute and collect payment for electricity risks increasing the volume of financial obligations that ultimately fall on the state.
The Financial Problem Extends Beyond Generation
The Finance Minister disclosed that Ghana’s annual energy sector shortfall was approximately US$1.4 billion in 2025, while arrears owed to independent power producers and fuel suppliers stood at about US$1.7 billion.
These figures illustrate the scale of the financial problem confronting the electricity sector. The shortfall is not simply a consequence of insufficient generating capacity.
It also reflects the cost of power procurement, distribution inefficiencies, revenue collection weaknesses and accumulated obligations across the value chain.
An IMF assessment of Ghana’s energy sector identifies distribution performance as a major part of this problem. It notes that technical and commercial losses, incomplete bill collection and underreporting of collections reduce the cash available to electricity distributors.
The resulting liquidity constraints affect payments to generators, fuel suppliers and other sector participants.
The IMF estimated that the annual gap between sector revenues and costs stood at about US$1.4 billion in 2025, equivalent to approximately 1.2 per cent of GDP.
It also reported that distribution losses remained around 27 per cent at the end of 2024, highlighting the scale of inefficiencies that reforms must address.
The budget’s emphasis on transmission and metering therefore reflects a recognition that financial recovery requires improvements across the entire electricity system.
US$500 Million For The Transmission Network
The proposed US$500 million investment will be directed towards modernising the national transmission system, with GRIDCo expected to strengthen the North-South network and improve connections between generation sources and major electricity consumers.
This is increasingly important as Ghana’s electricity demand grows and government seeks to attract investment into mineral processing, steel, cement and agro-industrial production.
The Energy Commission’s 2026 National Energy Statistical Bulletin recorded a system peak load of 4,283 megawatts in 2025, compared with 3,952MW in 2024. The increase demonstrates the pressure that rising demand is placing on the electricity system.
The Commission also recorded transmission losses fluctuating between 3.7 and 4.5 per cent in 2025, according to its 2026 Energy Outlook.
While these losses are distinct from distribution losses, they still represent electricity that does not reach consumers after entering the transmission network.
Modernisation could improve the system’s ability to move electricity efficiently, reduce congestion and accommodate new generating facilities. It could also support cross-border electricity trade, an important consideration for Ghana’s role as a regional electricity supplier.
However, the budget does not specify the individual transmission projects, substations, lines, procurement arrangements or expected reduction in losses to be achieved with the US$500 million.
The absence of these details makes it difficult to assess the investment’s expected impact or establish how progress will be measured.
Government will need to publish project-level information and measurable performance indicators to ensure the allocation translates into improved reliability rather than becoming another broad infrastructure commitment.
Two Million Meters And The Collection Challenge
The planned deployment of two million prepaid meters is another significant component of the proposed reforms.
Prepaid meters can improve revenue collection by requiring consumers to pay for electricity before consumption. They can also reduce some billing disputes, improve consumption monitoring and limit opportunities for certain forms of electricity theft and meter manipulation.
But metering alone will not resolve all distribution losses. Technical losses caused by ageing lines, overloaded transformers and inadequate network infrastructure require physical upgrades.
Commercial losses can also arise from illegal connections, inaccurate customer records, billing weaknesses and non-payment by institutions and other consumers.
The IMF has warned that Ghana’s collection challenges have a direct impact on the financial position of the electricity sector. Its analysis indicates that a collection rate of approximately 86 per cent in 2024 meant a significant proportion of electricity billed by ECG was not recovered.
The two-million-meter programme must therefore be accompanied by improvements in billing systems, customer data, enforcement against illegal connections and the management of public-sector electricity bills.
The budget does not clarify whether the two million meters will be additional installations, replacements for existing devices or an expansion of ongoing smart-meter programmes. It also does not provide a deployment schedule, cost estimate or geographical coverage.
Those details are important because ECG has already been involved in smart-meter procurement under the Ghana Energy Sector Recovery Programme.
Government must clarify how the new target relates to existing projects to avoid duplication and ensure public funds are used efficiently.
Private Participation And Public Accountability
The budget further commits government to fully implementing performance-based private-sector participation in electricity distribution by the end of 2027.
The Finance Minister said strategic public assets would remain protected while private-sector expertise would be used to improve distribution performance.
The proposed arrangement could introduce stronger operational incentives and improve efficiency, but its success will depend on the structure of the contracts, performance targets, regulatory oversight and protection of consumers.
Private participation should not become a transfer of operational responsibility without measurable obligations. Government must establish clear indicators covering collection rates, technical and commercial losses, service reliability, customer complaints and investment commitments.
The Public Utilities Regulatory Commission will also have an important role in ensuring that efficiency improvements do not come at the expense of fair tariffs or service quality.
The broader objective is to reduce the annual energy sector shortfall and lower the cost of electricity supply. The budget also targets a reduction in generation costs from about 16 US cents per kilowatt-hour to 8 US cents or less.
The Finance Minister’s statement on the meter programme was direct:
“To reduce distribution losses, 2 million prepaid meters will be deployed.”
The challenge now is to demonstrate how the meters, transmission upgrades and distribution reforms will work together. Ghana’s energy sector needs investment, but it also needs a system capable of converting electricity generated into reliable service, revenue and financial sustainability.
Without that operational discipline, additional generation capacity could continue to coexist with large public liabilities.
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