Otis Singleton
Ghana and Nigeria have had a tumultuous energy relationship. While Nigeria has long struggled with power shortages, Ghana has moved from having too little generating capacity to an abundance. Ghana has purchased gas from Nigeria, which it converts into electricity. However, in 2015, Ghana owed Nigeria's N-Gaz $170 million, and N-Gaz threatened to cut off supplies, which would have worsened Ghana's power crisis. Ghana's government agreed to pay the debt in three tranches starting in November 2015. In 2024, Ghana and Nigeria entered into a Power Pool Agreement, with Nigeria agreeing to supply Ghana with 80MW of electricity. However, it is unclear if and when Nigeria stopped supplying electricity to Ghana.
| Characteristics | Values |
|---|---|
| Does Nigeria supply electricity to Ghana? | No, Ghana purchases gas from Nigeria, which it converts into electricity. |
| Percentage of Ghana's electricity sourced from Nigeria | 25% |
| Date of latest agreement between the two countries | February 2016 |
| Amount owed by Ghana | $170 million |
| Nigeria's plan to extend electricity line to Ghana | In progress, as of August 2019 |
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What You'll Learn
Ghana's energy crisis
Ghana has historically depended on hydroelectric power, with the Akosombo dam supplying nearly 25% of the country's electricity needs. However, in recent years, the country has shifted towards fossil fuel-based power plants as its primary response to energy insecurity. This transition raises concerns about sustainability and energy justice. Ghana has also explored alternative energy sources such as solar power and bio-diesel.
The energy crisis in Ghana has been attributed to various factors, including the rapid succession of regimes and the impact of structural adjustment policies in the 1980s and 1990s, which hindered the development of the energy sector. International financial institutional pressure to liberalise the energy sector and utility sector reforms further exacerbated the challenges. Insufficient funds and budgetary constraints limited generation and transmission capacity, affecting both urban and rural areas.
In 2024, Ghana announced a deal with Nigeria to help address its energy crisis. Nigeria agreed to supply 80MW of electricity through the West African Power Pool, providing a safeguard for Ghana in the event of energy shortfalls. This agreement was welcomed as a positive step towards ensuring a stable power supply in Ghana. However, it is important to note that Nigeria only contributes a small portion of Ghana's gas supply, which is then converted into electricity.
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Ghana's gas bill debt to Nigeria
Ghana's energy sector has been facing challenges in meeting the country's power demands. In 2015, Ghana's state power generating company, the Volta River Authority (VRA), owed Nigeria's N-Gaz $170 million for gas supplies. This debt accumulated from 2012 to 2015, and N-Gaz threatened to cut off supplies by 70%, which could have exacerbated Ghana's power crisis. Ghana's energy supply is sourced from various means, with 69% generated from hydroelectric sources and 30.4% from fossil fuels.
Ghana's Ministry of Power spokesman, Kweku Sersah, assured that power supplies were no longer at risk. He stated that negotiations with Nigeria Gas (N-Gaz) were successful, and Ghana would settle the debt in three tranches starting in November 2015. Ghana's government also committed to paying in full for the gas it received between then and February 2016. This agreement ensured the continued supply of gas from Nigeria, which accounts for 25% of Ghana's power generation.
However, there were concerns about how VRA would generate the extra revenue to pay off the debt. The state Electricity Company of Ghana faced shortfalls in payments, and experts attributed this to low energy tariffs, illegal non-payment or underpayment by residents, and government arrears. To address the financial strain, VRA had previously borrowed money from Ghanaian banks to fulfil its purchase commitments.
In 2025, Ghana made significant progress in reducing its gas supply debt to Nigeria. According to a source, Ghana paid $65 million to N-Gas, a subsidiary of the Nigerian National Petroleum Company (NNPC) Limited, settling 90% of the $75 million debt. John Abdulai Jinapor, Ghana's Minister for Energy and Green Transition, had announced negotiations with N-Gas Limited to resolve the debt issue, as a potential suspension of gas supplies loomed due to the accumulated arrears.
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Nigeria's gas supply problems
Nigeria has long faced gas supply problems, which have impacted its electricity sector. In 2022, a gas leak inferno in Enugu State exacerbated the existing low gas-to-power supply problem in the country. This leak, which began on May 25, 2022, lasted for several weeks, causing outages across most parts of the country.
Nigeria's gas supply constraints are largely finance-related. The Nigerian Electricity Supply Industry (NESI) has struggled with liquidity issues, with distribution companies (DisCos) facing difficulties in receiving payments from electricity consumers. As a result, DisCos cannot pay the Nigerian Bulk Electricity Trading Company (NBET), which, in turn, affects their ability to pay generating companies (GenCos) and gas suppliers. This lack of liquidity across the entire value chain disrupts the stable supply of gas and electricity.
Out of the 29 generating companies in the country, 25 are natural gas-powered, highlighting the importance of addressing gas supply constraints. The Transmission Company of Nigeria (TCN), considered the weakest link in NESI, has faced challenges in allocating sufficient load to distribution companies due to gas constraints and technical issues within generating plants. These issues have resulted in persistent low generation and, consequently, low load allocation.
The impact of Nigeria's gas supply problems extends beyond its borders. Ghana, for example, purchases gas from Nigeria, which is converted into electricity by its power plants. This transaction accounts for 25% of Ghana's power supply. In 2015, Nigeria threatened to stop transferring gas to Ghana due to payment defaults, which could have further exacerbated Ghana's power outages and increased supply costs.
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Ghana's electricity exports
In 2020, Ghana supplied more than 12 million metric tons of oil-equivalent energy, with natural gas and hydropower contributing significantly to this figure. Ghana's electricity exports are facilitated through the West African Power Pool, which combines the electricity generation of Ghana, Nigeria, and the Ivory Coast. This agreement provides a safeguard for these countries in the event of energy shortfalls. Ghana's electricity exports have also been directed towards addressing its own energy requirements, which are projected to reach 25,836 GWh in 2025, representing a 4.7% increase in demand.
Ghana has actively explored and invested in renewable energy sources to boost its electricity generation and exports. The country has implemented mechanisms to attract investments in its biomass and bio-energy sectors, recognising the potential of its vast arable and degraded land for biofuel production. Additionally, Ghana has lifted its moratorium on issuing wholesale electricity supply licenses for renewable energy embedded generation projects, encouraging industry players to develop renewable energy generation initiatives for private use.
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Nigeria's electricity exports
Nigeria has long struggled with providing a stable electricity supply to its citizens. However, despite this, Nigeria has been exporting electricity to its neighbours. According to the Nigeria Electricity Regulatory Commission (NERC), Nigeria exports electricity to the Republics of Benin, Niger, and Togo.
Nigeria has also agreed to supply Ghana with electricity. In February 2024, President John Agyekum Kufuor announced that Ghana had made a deal with Nigeria to help solve the country's energy crisis. Nigeria agreed to supply Ghana with 80MW of electricity through the West African Power Pool, a joint agreement between Ghana, Nigeria, and the Ivory Coast. This agreement would allow the countries to combine their electricity generation into a pool, providing a safeguard in the event of an energy shortfall.
Ghana has an energy requirement estimated at 2000MW, with a total generation output of 1200MW. 69% of the energy is generated from hydroelectric sources, and 30.4% is generated from fossil fuels. While some have claimed that Ghana gets its electricity supply from Nigeria, this is false. Ghana purchases gas from Nigeria, which it then converts into electricity. This transaction only makes up 25% of Ghana's power supply.
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Frequently asked questions
No, Nigeria does not directly supply electricity to Ghana. Ghana purchases gas from Nigeria, which it then converts into electricity.
Ghana gets about 25% of its power from Nigerian gas.
Yes, in 2015, Nigeria threatened to stop supplying gas to Ghana due to a default in payment of $170 billion in bills from 2012 to 2015.
Yes, in 2024, Nigeria announced plans to supply 80MW of electricity to Ghana through the West African Power Pool agreement.
