The financing was the largest by the United States under Power Africa, which was launched in 2013 by then president Barack Obama and aims to bring electricity to tens of millions of households in Africa.
One reform under the agreement involved handing over operations at state-run Electricity Company of Ghana (ECG) in March to Ghana Power Distribution Services (PDS), a consortium led by Philippine electricity company Meralco.
In a statement on Tuesday, the U.S. embassy said the decision to terminate the contract was unjustified and that the MCC was therefore cancelling $190 million in grants.
The remaining $308 million will still be disbursed.
“The United States underscores the importance of contract sanctity as essential to a conducive investment climate and a pre-condition for inclusive economic growth,” it said.
“It has been a difference in opinion which we have mutually agreed to respect,” he said.
Meralco did not immediately respond to a request for comment.