Gold 4 Oil Policy: Ghana to exchange 205,750 oz of gold for 350,000mt of fuel import every month
Some 205,750 ounces of gold produced in the country is anticipated to be exchanged for 350,000 metric tonnes (mt) of fuel imports every month.
This is per the government’s “Gold 4 Oil” policy which is meant to reduce the high demand for the greenback by BDCs which in turn puts enormous pressure on the local currency causing the cedi to depreciate against the dollar and other major trading currencies.
According to the National Petroleum Authority (NPA), the monthly import bill of fuel under the “Gold 4 Oil” policy is estimated at $339.6m (GHS 4.4bn).
The 205,750 oz of gold estimated at the price of $1,650 per oz, is expected to cover $339.6m monthly import bill of fuel for sale at the various pumps.
Meanwhile, Government has finally reached an agreement with petroleum refiners in the United Arab Emirates to supply the nation with petroleum products beginning January 2023 under the gold for oil initiative.
The move is part of the Akufo-Addo administration’s effort to address the situation where oil importers chase dollars for oil import, thereby, putting pressure on the local currency, the cedi.
Vice President Dr. Bawumia broke the news in November 2022 when he said the government was engaging oil firms to use gold for oil.
Giving an update on the oil for the gold initiative on Thursday, Vice President Dr Mahamudu Bawumia wrote on his Facebook wall: “I am happy to announce that the Government of Ghana has concluded the arrangements for the operationalisation of the Gold for Oil policy.
“Consequently, the first oil products under the policy will be delivered next month (January 2023). My thanks to the Minister for Energy, Minister for Lands and Natural Resources, Governor of the Bank of Ghana, the Chamber of Mines, PMMC, NPA and BOST for their leadership in the operationalisation of the Government’s Gold for Oil Policy.”
Gov’t targets $3bn forex savings from gold-oil barter policy
Government is targeting to save about US$3billion in foreign exchange yearly from the proposed gold for oil barter policy, Vice President Dr. Mahamudu Bawumia has revealed.
The policy seeks to accumulate domestically mined gold in exchange for finished petroleum products, which he explains will reduce demand for foreign exchange to finance imports of petroleum products worth about US$3billion yearly.
“So, we will be saving US$3billion from lack of demand from the Bank of Ghana for foreign exchange. This reduces pressure on the cedi immediately, and therefore you will see much, much lower depreciation of the currency,” he explained.
Government plans to implement the gold for oil exchange in the first quarter of 2023.
Instead of the Bulk Distribution Companies going to the Bank of Ghana every few weeks to ask for foreign exchange to import oil, he said, this will no longer be the case when the barter policy is implemented.
This, he added, will effectively lower depreciation of the currency by ushering in a more stable exchange rate regime to enable the business community to flourish.
