Ghana Introduces Competitive Bidding Law to Drive Down Power Costs
The government has taken a bold step to reform the energy sector with the passage of a new Legislative Instrument (LI) that mandates the procurement of additional power generation through competitive bidding.
The Energy Commission (Planning and Competitive Procurement of Additional Electricity Generation Capacity) Regulations, 2025 (L.I. 2508) was announced by the Minister of Energy and Green Transition, John Abdulai Jinapor, at the ongoing African Energy Week in Cape Town, South Africa.
Competitive Bidding Explained
Under the new regime, utility companies such as the Electricity Company of Ghana (ECG) and regulators will request bids from multiple power producers to supply electricity. The structured process is designed to select the cheapest and most reliable options, ensuring fair, open, and transparent competition.
Although Ghana already operates with long-term Power Purchase Agreements (PPAs), the competitive approach is expected to force even existing contracts with take-or-pay clauses to reduce their rates, ultimately lowering tariffs for consumers.
Minister’s Remarks
Mr. Jinapor described the LI as a milestone in President John Dramani Mahama’s vision to deliver affordable electricity tariffs that can stimulate industrial growth and economic transformation.
“This reform marks a new era for Ghana’s power sector. Competitive bidding will not only ensure value for money but also unlock innovation and greater private sector participation,” he said.
Currently, power generation makes up about 65% of the total cost in Ghana’s electricity value chain. By introducing competitive procurement, the government aims to rebalance costs, improve efficiency, and deliver better value to consumers.
Key Objectives of LI 2508
The regulation outlines a clear framework for power sector reform, focusing on:
- Enhancing transparency in procurement.
- Promoting cost-effectiveness and affordability.
- Attracting a diverse mix of technologies and investors.
- Ensuring predictable and streamlined processes.
To support implementation, regulatory institutions will be strengthened, including better vetting of licence applications and maintaining an up-to-date PPA register for greater oversight.
International Collaboration
The Ministry is working with global partners such as the World Bank, African Development Bank, and the Energy for Growth Hub to:
- Standardise PPAs.
- Build local capacity in contract design and negotiation.
- Balance investor returns with consumer protection.
- Deliver high-quality, competitive electricity.
A New Chapter for Ghana’s Energy Sector
Mr. Jinapor emphasized that with LI 2508, Ghana is positioning itself as a regional leader in energy sector reform, highlighting the country’s commitment to transparent governance, fiscal discipline, and sustainable growth.
The policy is expected to boost investor confidence, foster innovation, and support Ghana’s transition to a resilient and affordable energy future.
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