December 30, 2022

ACEP: “Gold For Oil” Political In Structure

The Executive Director of Africa Centre for Energy Policy (ACEP), Benjamin Boakye has stated the government’s Gold for Oil policy will hand over the country’s gold mineral to politicians.

According to the government, the policy entails the exchange of gold for oil without the use of dollars but ACEP says such an arrangement does not exist.

The policy was first announced by Vice President Dr Mahamamudu Bawumia in November.

He explained the policy was meant to protect the country’s foreign exchange reserve which was fast dwindling causing a steep cedi depreciation and inflation.

“The demand for foreign exchange by oil importers in the face of dwindling foreign exchange reserves results in the depreciation of the cedi and increases in the cost of living with higher prices for fuel, transportation, utilities. To address this challenge, Government is negotiating a new policy regime where our gold (rather than our US dollar reserves) will be used to buy oil products.”

To him, this is a major structural change which will transform the country’s balance of payments and “significantly reduce the persistent depreciation of our currency with its associated increases in fuel, electricity, water, transport, and food prices.


But ACEP referenced, “in a recent presentation to stakeholders, the National Petroleum Authority (NPA) presented a transaction structure which reveals that oil products will be imported with the dollar, further clarifying that gold will not be exchanged for oil. According to the NPA, the oil supply will be backed by cash deposits and standby Letters of Credit (LC) in dollars.”

By this, he supposes that the policy “only seeks to hand control of the gold and oil value chain to politicians”.

Benjamin Boakye further said the policy was formulated without consultation with the entire stakeholders in the gold value chain.”

BOST, TOR, PMMC Incompetence
ACEP believes the Bulk Oil Storage and Transportation Company (BOST), the Tema Oil Refinery (TOR) and the Precious Minerals Marketing Company (PMMC) have poor track records for oil and gold trading and thereby should not be given the mandate over the policy.

“The Bulk Oil Storage and Transportation Company (BOST), Tema Oil Refinery (TOR) and PMMC are historically poor performers in oil and gold trading. Much of the energy sector debt problems are directly linked to the trading operations of state agencies. The PMMC has resigned from active trading to focus on assaying, having traded into a cash crunch.

“It is, therefore, nervy for any serious analyst to imagine that these agencies would suddenly become efficient by controlling an “octopus” transaction in the nature of “Gold 4 Oil” to manage currency, gold, and oil price risks.”

The Gold for Oil policy will take effect in January 2023 according to Dr Bawumia.


Source: Fuseini

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