Ghana paid US$40 million for about 40,000 metric tonnes of diesel in the first consignment of its Gold-for-Oil programme which kicked in last month.
According to a statement released on February 5 by the National Petroleum Authority (NPA), “The prime objective of the programme is to use additional foreign exchange resources from the Bank of Ghana’s Domestic Gold Purchase(DGP) programme to provide foreign currency for the importation of petroleum products for the country which currently stands at about US$350 million per month.”
The statement also outlined the two main channels of supply as: “by way of barter trade where gold is exchanged for oil or via broker channel where the gold is converted into cash and paid to the supplier.”
Below is the full statement by the NPA
FULL IMPLEMENTATION OF THE GOLD FOR OIL PROGRAMME
1. The implementation of the government’s Gold for Oil (G4O) programme commenced with the arrival of the first consignment of about 40,000 metric tonnes of diesel on January 15, 2023, valued at about US$40 million.
2. The prime objective of the programme is to use additional foreign exchange resources from the Bank of Ghana’s Domestic Gold Purchase(DGP) programme to provide foreign currency for the importation of petroleum products for the country which currently stands at about US$350 million per month.
3. Payment for oil supply is to be done in two channels: by way of barter trade where gold is exchanged for oil or via broker channel where the gold is converted into cash and paid to the supplier.
4. The first consignment of 40,000 metric tonnes of diesel constitutes about 10 percent of the country’s combined monthly demand for petrol and diesel.
5. The plan is to gradually increase imports under G4O to constitute about 50 percent of the country’s total demand for petrol and diesel by March 2023.
6. The implementation of the G4O will ease pressure on the dollar (the currency used for the importation of petroleum products) and avoid the occasional increases in petroleum prices resulting from the depreciation of the cedi against the dollar.
7. The programme will ensure that the cost of importing the products from international oil traders is comparatively cheaper.
8. The consequent reduction in foreign exchange pressures and premiums charged by international oil traders as well as efficiency gains from the value chain will lead to lower ex-pump prices in the country.
9. To ensure that the price of petroleum products imported under the G4O programme reflects at the pumps to benefit the consumer, the National Petroleum Authority (NPA) will regulate the prices of the products in the interim until the volumes increase significantly.
10. NPA will work with Bulk Oil Storage and Transportation Company Limited (BOST) to negotiate prices with international oil traders to ensure that the landed cost of products procured under the programme are always competitive.
11. The price at which BOST will sell the products to Bulk Import, Distribution, and Export Companies (BIDECs) will be approved by the NPA. The price at which the BIDECs will sell the products to Oil Marketing Companies (OMCs) will also be approved by the NPA.
12. The applicable exchange rate for pricing the products supplied under G4O will be based on the average rate at which the gold was purchased from the licensed gold exporters by BoG. The BoG ordinarily purchases the gold aggregated by the Precious Minerals Marketing Company (PMMC)
13. The NPA will put measures in place to ensure that OMCs that lift products supplied under the G4O programme pass the price on to consumers accordingly. In this respect, BIDECs and OMCs who lift and supply G4O products will sell at the ex-refinery and ex-pump prices that will be determined by the NPA. If there must be a comingling of products supplied under G4O and other sources, the ex-refinery and ex-pump prices will be computed using a weighted average.
14. All BIDECs and OMCs who wish to purchase products under the G4O programme will be required to sign off an undertaking confirming their willingness to comply with the terms and conditions for partaking in the purchase and sale of G4O products.