Former Chief Executive at the Ghana National Petroleum Corporation (GNPC), Alex Mould, has disclosed that no new foreign exchange will accrue to Ghana from the sale of gold by BoG via the Domestic Purchase Programme (DPP).

According to him, thefo reign exchange accruing to Ghana from gold exports as a country will not change, since the Bank of Ghana already gets all the forex from gold sales by the small-scale miners.

Since the country is not exporting additional gold, Mr Mould highlighted that there will be no new forex revenue coming into the country and as such the program will not reduce the forex pressure in the country.

Mr Mould revealed that all revenue from Ghana’s gold exports via large scale, small scale, and community miners accrues to, and is brought back into the country either through the Bank of Ghana (BoG) and/or commercial banks. He indicated that the only exception, being those Mining Companies, that government has approved to withhold some remittances.

“Thus, no new foreign exchange will accrue to Ghana from this sale of gold by BoG via the Domestic Purchase Programme (DGP). It is the same gold that has already been sold by the licensed exporter, the revenue for which is already being remitted back to Ghana (via BoG and commercial banks).”
Alex Mould

If government decides to export the gold directly via BoG’s DGP program, Mr Mould indicated that then the licensed Exporters’ share of gold exports will reduce whereas the share of gold exports by Bank of Ghana will increase. This, he noted, is a zero-sum game as no additional gold will be sold and it will just be a redistribution of the export proceeds accruing to licensed exporters and to BoG via PMMC.

“If PMMC is purchasing the Gold in Cedis how are they funding it?? Is Govt (BoG) lending them money? If so, is that the remit of BoG to engage in commercial banking activities thus crowding out the commercial banks?”
Alex Mould

Elaborating on what he described as the “untold story” of the Gold for Oil framework, Mr Mould emphasized that there will be “no significant” pump price change unless the country experiences either a 10-20% change in the crude oil price, from $85/bbl to $70/bbl.

Additionally, he noted that there could be a reduction as well if the exchange rate drops from 12.5 to 11.00 Cedis per dollar.

Terms of bidding process in Gold for Oil

Critiquing the terms of bidding process government used in the competitive contract, the former GNPC Chief executive questioned who the importer on record will be, whether Bulk Oil Storage and Transportation (BOST) or a Bulk Distributing Company (BDC).

“Will the bidding be advertised?, Who will be invited – IOTCs, indigenous BDCs?, Will the results be published? and how will we know that they are achieving a lower price compared to the other licensed BDCs who import products into the market?”
Alex Mould

Furthermore, Mr Mould explained that government is simply allocating a specific portion of the export proceeds received into the country towards the purchase of imported petroleum products. This, he revealed, is something government could still do as all the export proceeds by licensed exporters are already channeled through BoG.

From a cashflow perspective, Mr Mould underscored that there is no difference between Barter and Broker channels, but the risks involved are different.

“Is BOST acting as an agent for BoG in the importation of petroleum products in this ‘offtaker’ role, or is BOST the buyer and importer on record? If not, then who is the Importer on record – is BoG the importer? But, does BoG have a licence to import products into the country?”
Alex Mould

Mr Mould emphasized that BDCs are the only ones licensed to import products, and since BOST does not have a BDC licence, he questioned whether the oil import is a strategic stock purchase under the strategic stock programme. He further quizzed the kind of licences BOST has with importation of petroleum products.