NPA Insists “Gold For Oil” Will Lead To Lower Ex-Pump Prices

The National Petroleum Authority (NPA) has reiterated the essence of the barter trade system adopted by the government for the purchase of petroleum products.

Although the first consignment of petroleum products delivered to the country during mid-January doesn’t seem to have had any impact on the pump prices of petrol and diesel, the Authority says the programme will curb the occasional increases in petroleum prices.

Ghana witnessed a steep increase in the price of petroleum products at the pumps from January 2022 due to the fall of the cedi to the dollar at the time, however, decreases were recorded close to the end of the year.

In November last year, the government announced the “Gold For Oil” programme- a barter of gold in exchange for oil between Ghana and some international oil traders.

The NPA explains that the main 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.

Delivery of Products

The first consignment of petroleum products under the scheme was supplied on January 15, 2023.

The supplied 40,00 metric tonnes of fuel is valued at US$ 40 million.

A statement from the Authority said, “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.

“The plan is to gradually increase imports under G4O to constitute about 50 percent of the country’s total demand of petrol and diesel by March 2023.”

In Spite of the supply of the products- under the touted programme- prices of diesel and petrol at the pumps saw an increase in the first pricing window of February 2023.

Payment

The public was thrown into amazement when it was reported last week that instead of gold, the government rather paid for the first consignment with cash but the Authority has explained that the 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.

The government will receive gold purchased by the BoG from the Precious Minerals Marketing Company (PMMC) for the barter transaction.

Regulation Of Prices

The NPA will be responsible for the regulation of the prices of petroleum products under the programme.

The Authority said the products will be priced based on the average rate at which the gold was purchased from the licensed gold exporters by BoG.

It said, “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.

“NPA will work with Bulk Oil Storage and Transportation Company Limited (BOST) to negotiate prices with the international oil traders to ensure that the landed cost of products procured under the programme is always competitive.

“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.”

It noted, “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.”

Essence

“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”, it said.

Additionally, it said the programme will ensure that the cost of importing the products from international oil traders is comparatively cheaper.

“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.

Source: opemsuo.com/Hajara Fuseini