The World Bank supports energy sector policy reform and access to clean cooking

The World Bank has approved a $250 million loan from the International Development Association (IDA) and a $10 million grant from the National Power Sector Governance Assistance Program for Ghana’s four-year Power Sector Recovery for Results (PforR) program.

PforR will support the Energy Sector Recovery Program (ESRP) to improve the financial viability of electricity distribution and increase access to clean cooking solutions.

Electricity distribution losses are high in Ghana due to low collection rates and below-cost energy recovery rates, worsening the operational and financial performance of power utilities in the country. The Ghanaian government contributes approximately two percent of GDP annually to cover financial shortfalls in the energy sector.

“Through this important performance-based financing, the World Bank is committed to supporting the recovery of Ghana’s energy sector and its financial stability. The operation aims to strengthen revenue collection and improve the quality of energy supply, including through investments in prepaid meters and in commercial meter management systems for distribution companies, said Robert Taliercio, World Bank Country Director for Ghana, Liberia and Sierra Leone.

PforR complements regulatory and policy reforms in the energy sector supported by the World Bank’s Development Policy Finance Series (such as the IDA-supported First Resilient Recovery Development Policy Finance Operation, which was approved in January 2024) and the ongoing Extended Credit Facility Program IMF for Ghana. PforR focuses on improving institutional capacity and accountability and provides financing directly to energy sector companies to implement capital spending programs.

“PforR aims to reduce the costs of providing electricity services by improving the economic use of generation capacity and strengthening the commercial and operational performance of distribution companies,” said Dhruva Sahai, infrastructure program leader.

The Clean Cooking component of the program will increase access to liquefied natural gas for domestic and commercial use by households, schools and businesses in Ghana.

PforR will provide direct incentives to subsidize the cost of stoves and accessories – excluding cylinders – for first-time home users, commercial caterers and second-cycle schools. Through these efforts, the Program aims to increase women’s access to clean cooking solutions, reduce time poverty, reduce health risks from exposure to coal stove smoke, and improve women’s income-generating opportunities and employment opportunities.