SOURCE: EMMANUEL TORNYI
The government of Ghana is in talks with a Dubai-based oil firm for a barter arrangement that will enable the country to buy fuel with gold.
The government reached a ‘tentative’ agreement with the oil firm called Emirates National Oil Company.
The policy to buy oil products with gold rather than US dollar reserves is meant to tackle dwindling foreign currency reserves coupled with the demand for dollars by oil importers, which weakens the Ghana cedi and increases living costs.
Vice President Dr. Mahamudu Bawumia said the government is projecting to save about US$3 billion in foreign exchange yearly from the proposed policy which seeks to acquire oil products in exchange for gold.
He explained that the policy which would be implemented in the first quarter of next year could also relieve some inflationary pressure on the cedi.
Speaking at the 11th Association of Ghana Industries (AGI) Ghana Industry and Quality Awards in Accra, Bawumia said “So we will be saving US$3 billion from the lack of demand from the Bank of Ghana (BoG) for foreign exchange. This reduces the pressure on the cedi immediately and, therefore, you will see much, much lower depreciation of the currency.”
He indicated that the import-reliant nature of the economy, particularly for finished petroleum products, accelerated the depreciation of the cedi and increased the cost of doing business and cost of living.
The former Chief Executive Officer (CEO) of Ghana National Petroleum Corporation (GNPC), Alex Mould adding his voice to the policy has raised issues concerning the operationalization of the gold for oil policy.
He explained that the government is basically doing the same thing the existing industry players do by bringing in finished products into the country.
Earlier, the Executive Director for the Chamber of Petroleum Consumers, Ghana (COPEC), Duncan Amoah, said the price of petroleum products may see a decline if the oil secured by the government is distributed.
On January 15, 2023, Ghana took delivery of 40,000 metric tons of the first consignment under the policy from the United Arab Emirates after the gold for oil policy was initiated by the government.
Duncan Amoah is optimistic that the price of the commodity might see a drop if the distribution of the commodity is done soon.
But Alex Mould said the government buying and selling gold will not bring any extra forex because the Bank of Ghana (BoG) already gets the foreign exchange that the small-scale and community miners sell.
In a Facebook post, he said there is no cheap fuel anywhere adding that “we will not see a 20% decrease in fuel because of the gold-for-oil deal.