"Miners unhappy with Gov’t’s ‘gold for oil’ barter policy"

" Miners unhappy with Gov't's 'gold for oil' barter policy \r\n\r\nWhile government is yet to officially write to the Chamber of Mines on the proposed gold for oil barter policy, the Chamber is wary of how having too much cedis could affect its members.\r\n\r\nThe government wants large-scale miners to sell, at least, 20 percent of their gold in local currency to Bank of Ghana toward a gold for oil barter policy. But the Chamber says the policy, combined with an already existing revenue repatriation programme, would now mean miners are retaining as much as 50 percent of revenue in cedis, a situation it cautioned could have very dire consequences for miners given the wobbly nature of the domestic currency.\r\n\r\n \u201cIf you combine the existing repatriation arrangement with the 20 percent, effectively mining companies are expected to convert 50 percent of their revenue into Ghana cedis and that maybe too much for the mining industry. We will continue to discuss but we want to pitch at a point where we will be able to help the country and, at the same time, we are not going to make the industry worse off. \r\n\r\n \u201cWe may be sitting with so much cedis, and once we sit with so much cedis \u2013 a volatile currency which is wobbly \u2013 then, it actually affects you as well. So we need to calibrate it and put it at a point both parties will be happy,\u201d says the Chamber\u2019s Chief Executive Officer, Sulemana Koney.\r\n\r\nMr. Koney spoke to the\u00a0 B&FT\u00a0 on the sidelines of the 2022 Ghana Mining Industry Awards in Accra, and said much proper engagements are needed to strike a fine balance between what the industry can do to help the government and maintain a vibrant industry.\r\n\r\nAsked if the Chamber, which is the umbrella body of all large miners, has been officially informed about the proposed oil for barter policy, he said: \u201cAs far as we are concerned, we have had conversations but essentially on the back of mutually agreed points or positions. So it is something we need to have proper conversations with the government on, but we have not had a formal communication from the Minerals Commission or sector ministry or possibly the Bank of Ghana.\r\n\r\n \u201cWe have had conversations, no two ways about it, with the Governor of the central bank, the Vice President and Members of Cabinet that our expectations or outstanding was that it was going to be a short-term programme. We had targets for 2022 and 2023; that is what we had and we have had the occasion to find out from our member-companies how much of the target presented to us by the BoG and we have gone back to BoG to say this is what our members can do. \r\n\r\n \u201cSo, yes we have not had a formal communication, but\u2026we need to sit and discuss how we can work together to make sure we balance the industry because it is important that we continue to have viable mining industry,\u201d he further added.\r\n\r\nHe also clarified that the underpinnings of the gold for oil exchange policy and the ongoing gold purchase programme by Bank of Ghana were different, as the former seeks to accumulate domestic mined gold in exchange for finished petroleum products, which the economy spends about US$380million importing every month.\r\n\r\nThis year alone, the cedi has lost over 53 percent of its value; and the gold for oil exchange policy, which Vice President Dr. Mahamudu Bawumia says would save the economy US$3billion in foreign reserves, when implemented, is one of a number of desperate measures to arrest the persistent depreciation of the domestic currency.\r\n\r\nMeanwhile, questions have been asked about the viability of the policy, particularly how the government intends to raise as much as US$380million monthly to buy gold in exchange for petroleum products.\r\n\r\nFor instance, the policy has been described as premature and one with the potential to breed corruption by two leading energy sector civil society organisations \u2013 Africa Centre for Energy Policy (ACEP) and Institute for Energy Security (IES).\r\n\r\n \u201cWe can always stress-test policy before announcements. Gold for oil is weird,\u201d says Benjamin Boakye, ACEP\u2019s Executive Director.\r\n\r\n \u201cThe common denominator is the dollar. Total gold export was US$4.8billion last year, just about how much we needed to import refined products.\u201d \r\n\r\n \u201cOur monthly import bill for finished petroleum products is roughly US$380million. Can government get gold to the tune of US$380million every month for exchange of finished products?\u201d Nana Amoasi VII, Executive Director of IES, asked.\r\n\r\nHe warned that barter is not a transparent arrangement, and could breed corruption.\r\n\r\nHe said similar arrangements \u2013 including Iran\u2019s \u2018oil for food programme\u2019 in the 1990s, Nigeria\u2019s recent \u2018crude oil for finished products\u2019 programme \u2013 all became avenues for corruption.\r\n\r\n \u201cWe may be sitting with so much cedis, and once we sit with so much cedis \u2013 a volatile currency which is wobbly \u2013 then, it actually affects you as well. So we need to calibrate it and put it at a point both parties will be happy,\u201d says the Chamber\u2019s Chief Executive Officer, Sulemana Koney.\r\n\r\nMr. Koney spoke to the\u00a0 B&FT\u00a0 on the sidelines of the 2022 Ghana Mining Industry Awards in Accra, and said much proper engagements are needed to strike a fine balance between what the industry can do to help the government and maintain a vibrant industry.\r\n\r\nAsked if the Chamber, which is the umbrella body of all large miners, has been officially informed about the proposed oil for barter policy, he said: \u201cAs far as we are concerned, we have had conversations but essentially on the back of mutually agreed points or positions. So it is something we need to have proper conversations with the government on, but we have not had a formal communication from the Minerals Commission or sector ministry or possibly the Bank of Ghana. \r\n\r\n \u201cWe have had conversations, no two ways about it, with the Governor of the central bank, the Vice President and Members of Cabinet that our expectations or outstanding was that it was going to be a short-term programme. We had targets for 2022 and 2023; that is what we had and we have had the occasion to find out from our member-companies how much of the target presented to us by the BoG and we have gone back to BoG to say this is what our members can do. \r\n\r\n \u201cSo, yes we have not had a formal communication, but\u2026we need to sit and discuss how we can work together to make sure we balance the industry because it is important that we continue to have viable mining industry,\u201d he further added.\r\n\r\nHe also clarified that the underpinnings of the gold for oil exchange policy and the ongoing gold purchase programme by Bank of Ghana were different, as the former seeks to accumulate domestic mined gold in exchange for finished petroleum products, which the economy spends about US$380million importing every month.\r\n\r\nThis year alone, the cedi has lost over 53 percent of its value; and the gold for oil exchange policy, which Vice President Dr. Mahamudu Bawumia says would save the economy US$3billion in foreign reserves, when implemented, is one of a number of desperate measures to arrest the persistent depreciation of the domestic currency.\r\n\r\nMeanwhile, questions have been asked about the viability of the policy, particularly how the government intends to raise as much as US$380million monthly to buy gold in exchange for petroleum products.\r\n\r\nFor instance, the policy has been described as premature and one with the potential to breed corruption by two leading energy sector civil society organisations \u2013 Africa Centre for Energy Policy (ACEP) and Institute for Energy Security (IES).\r\n\r\n \u201cWe can always stress-test policy before announcements. Gold for oil is weird,\u201d says Benjamin Boakye, ACEP\u2019s Executive Director.\r\n\r\n \u201cThe common denominator is the dollar. Total gold export was US$4.8billion last year, just about how much we needed to import refined products.\u201d \r\n\r\n \u201cOur monthly import bill for finished petroleum products is roughly US$380million. Can government get gold to the tune of US$380million every month for exchange of finished products?\u201d Nana Amoasi VII, Executive Director of IES, asked.\r\n\r\nHe warned that barter is not a transparent arrangement, and could breed corruption.\r\n\r\nHe said similar arrangements \u2013 including Iran\u2019s \u2018oil for food programme\u2019 in the 1990s, Nigeria\u2019s recent \u2018crude oil for finished products\u2019 programme \u2013 all became avenues for corruption."

"Miners unhappy with Gov’t’s ‘gold for oil’ barter policy"

World economy’s great escape is no comfort to the G-20AMP

Egypt to receive € 1 billion loan from EUAMP

Nigerian crude sells at premium but weak output, high cost hurt economyAMP

Fernandes double earns Man Utd point at BournemouthAMP

Tchouameni strike gives Real Madrid scrappy winAMP

Perfect day for Guardiola as Man City take top spotAMP

Traditional German, Swiss chocolate makers feel the cocoa crunchAMP

BoG reports steady foreign exchange reserves amid donor support delaysAMP

Ghana reaches Staff-Level agreement with IMF after second review; secures $360m third trancheAMP

World economy’s great escape is no comfort to the G-20AMP

Egypt to receive € 1 billion loan from EUAMP

Nigerian crude sells at premium but weak output, high cost hurt economyAMP

Fernandes double earns Man Utd point at BournemouthAMP

Tchouameni strike gives Real Madrid scrappy winAMP