In 2019, Ghana paid an estimated $620 million for electricity that the country did not need or use. That’s a sign of the damage done by secret deals for power.
When President Nana Akufo-Addo came to power in 2016, his government inherited 43 electricity contracts that the previous administration had signed, guaranteed, or both. The new team quickly cancelled 11 contracts and set about delaying or renegotiating many of the rest. The US Securities and Exchange Commission successfully prosecuted a bribery case over one power project. Meanwhile, electricity outages continued. Aiming for financial solvency in the face of commitments to buy expensive power, Ghana’s industrial tariffs were raised to $0.22/kWh, among the highest in the world. And the country’s plans to expand renewable energy are stalling, in part because of too many questionable projects already in the pipeline.
How did this happen? Mostly in the dark. That means Ghana’s public still doesn’t know exactly what occurred, who was involved, and what obligations may still be lingering. Unlike oil contracts or most sovereign borrowing, the legal document at the heart of most private electricity generation projects—the power purchase agreement or PPA—is shielded from the public. Although hidden contracts are common across emerging markets, there is no benefit to secrecy—and, as Ghana’s story suggests, huge risks.
That’s why we, along with Penn State law professor and PPA guru Mohamed Rali Badissy, are proposing greater transparency around electricity contracts. Specifically, we argue for publishing PPAs as a first step.
We make the case that establishing norms of PPA disclosure will help to reduce the risks that Ghana and many other countries face from backdoor dealings, overpayment, mounting debt, and unnecessary overcapacity that all conspire to delay the provision of low-cost reliable power for everyone.
There’s urgency too for clean energy advocates who hope that emerging markets will rapidly accelerate utility-scale wind and solar: if every contract has to be customized and negotiated in secrecy over many years, we will never deploy fast enough. Transparency allows for standardization, scaling and learning what works, reducing the time and cost of reaching agreements, and helping to ensure they deliver for both climate and customers.
Our paper is the first salvo in a wider campaign for much-needed transparency across the power sector. Read the full paper here and watch for more here. For Ghanaians and for the 3 billion-plus people worldwide currently living without cheap, reliable, sustainable power, sunlight is a must.
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise.
CGD is a nonpartisan, independent organization and does not take institutional positions.
