February 2, 2023

COPEC Reacts To Gov’t’s “Money-For-Oil” Transaction

The Chamber of Petroleum Consumers (COPEC) has expressed surprise after the Energy Ministry’s confession that the first consignment of the initially planned exchange of gold for petroleum products was paid with cash.

This, the Chamber said, confirms their fears.

Following the demands for the contractual agreement on the policy after the delivery of the first consignment of what was supposed to be under the “Gold-for-oil” policy by stakeholders, the Deputy Minister for Energy, Andrew Egyapa Mercer, divulged the government paid in cash instead of gold during a media interview.

Reacting to this, the Executive Director of COPEC, Duncan Amoah said the government was treading a dangerous path.

“We entered into a deregulated environment in July 2015 on the back of the fact that the government said it didn’t have the funds to pay for under-recovery losses incurred by BDCs and other players. Then a few years down the line, the same government comes out to say it is taking money to go into fuel trading, it means the government is now in competition with private players with whom we have an agreement to procure and sell fuel to Ghanaians.”

“We wonder the basis for taking money from the Bank of Ghana without approval from Parliament to go into a very dangerous arena of fuels trading. It is an arena where three things are likely to happen; you are either going to make a profit, break even or make losses.”

He wants those behind this development to be surcharged; pointing to the fact that the delivery had no impact on pump prices.

According to him, the Gold-For-Oil policy is a “whirlwind” that must be interrogated and scrutinised by Parliament if the government wants to carry it out.

However, he suggests the Bank of Ghana take up the measures it implemented at the end of 2022 which led to the cedi’s appreciation and rather abandon the Gold-For-Oil policy.

“BoG should have continued the policy that strengthened the cedi against other trading agencies in November”, he said in an interview monitored by opemsuo.com.

The Gold-for-oil policy was first announced to Ghanaians on November 24, 2022, in a social media post by the veep, Dr Mahamudu Bawumia.


Then, he said the policy was under negotiations.

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.

“This is because the exchange rate (spot or forward) will no longer directly enter the formula for the determination of fuel or utility prices since all the domestic sellers of fuel will no longer need foreign exchange to import oil products”, he explained in post.

The first consignment under the supposed agreement hit the shores of the country in the middle of January 2023.


Source: opemsuo.com/Hajara Fuseini

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