The second round of the government’s popular gold-for-oil programme has arrived into the country, with a total of 40,000 metric tonnes of oil expected to be delivered. This has increased the expectations of petroleum product consumers across the country, with many believing prices at the pump will reduce in the coming days.
So far, Ghana has received 41,000 metric tonnes of oil through the programme announced by Vice President Mahamudu Bawumia, who said “It will fundamentally change our balance of payments and significantly reduce the persistent depreciation of our currency.”
Last week, the Managing Director of the Bulk Oil Storage and Transportation Company Limited (BOST), Mr Edwin Provencal, announced that the price of fuel is expected to fall by GHS1 in the coming days as Ghana prepares to take delivery of four more oil consignments through the gold-for-oil programme.
Mr Provencal noted that BOST is working with the National Petroleum Authority (NPA) to increase these consignments. “I can tell you for a fact that we’re working on the pricing with NPA and we should expect GHC1 reduction at the pump for gasoline,” Mr Provencal said.
Mr Provencal noted that BOST will get the needed credibility, in the long term, through the gold-for-oil policy. He added that the policy will also help BOST to solve some challenges when it comes to building a strategic reserve of stocks of petroleum products for the country.
“We are also mandated to build a strategic reserve of stocks of petroleum products to meet a minimum of six weeks of national consumption,” he noted, adding, “This, we haven’t done too well for obvious reasons.”
“This is because we didn’t have the men and the money,” Mr Provencal explained. “Hopefully, this programme [gold for oil] will help us solve some of these challenges in the long term.”
“We used to have open credit account supplies and this means that they give you the product, and after a while, you pay them without any instrument and because of the past, we abused it, and we went into debt. So, we lost credibility in the marketplace. We are restoring that credibility. And we believe strongly that this programme [gold for oil] if it runs for a while, will give us that credibility.”
Mr Edwin Provencal
The Barter As Announced By Dr Bawumia
The barter arrangement was first announced by the Vice President, Dr Alhaji Mahamudu Bawumia, in November last year, 2022 as part of measures to stabilize the Ghanaian cedi and keep prices of petroleum products low.
“If we implement it as we have envisioned, it will fundamentally change our balance of payments and significantly reduce the persistent depreciation of our currency,” Dr Bawumia said when he disclosed the deal at the Association of Ghana Industries’ awards night in Accra on November 26. “The barter of gold for oil represents a major structural change,” the Vice President added.
Some market watchers, however, cast doubts over the viability of the policy, questioning its sustainability. But the Bank of Ghana moved to allay those fears. The Director of Financial Market at the Bank, Stephen Opata, indicated that the country has sufficient gold in its reserves to sustain the policy.
“As for the quantities, based on the production numbers we saw last year, gold has picked up. We believe that we can buy enough gold to sustain the program. I must say that the numbers we are currently looking at is about 160,000 ounces per month and that will represent about 50 to 60 per cent of the consumption of the country.”
Stephen Opata
Mr Opata noted that there is no cause for alarm as the Central Bank is well positioned to meet the 160,000 ounces of gold per month demand for under the deal to sustain the same.
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